Navigating the Bear Market: Technical Insights and Safe Havens with Katie Stockton

Katie Stockton Breaks Down the Bear Cycle: Technical Analysis You Need Now (YouTube link)

The podcast episode of Market Maverick features host Toby and guest Katie Stockton, a technical analyst, discussing the chaotic stock market environment following a significant volatility spike and a 6-7% single-day market move. 

Key points include:

• Market Volatility and Short-Term Lows: The recent market surge, driven by short covering, indicates a short-term capitulative low but not a cycle bottom. Historical data suggests such moves often lead to bearish outcomes over six months, with a 67% chance of retracing gains.
• Market Internals: Katie uses aggregated market internal measures (sentiment, breadth, leadership) to assess market health. Extreme readings in some indicators (e.g., new highs vs. lows) suggest a washout, but others, like stocks above their 200-day moving averages, indicate potential for further declines.
• Bearish Cycle Indicators: Monthly charts show bearish signals, including MACD downturns and breaks below the Ichimoku cloud, suggesting a cyclical bear market that began around February 2025. Bear cycles typically last less than a year.
• Safe Havens: Positive momentum is scarce, but precious metals (gold, silver) remain strong. Short-term treasuries (e.g., SPTS ETF, yielding ~4-4.2%) and, to a lesser extent, long-term treasuries offer safety. Agricultural commodities and select international markets (e.g., China, Mexico) show potential but require cautious entry points.
• Sector Opportunities: Enterprise software (e.g., CrowdStrike) and European defense stocks show relative strength, though not immune to broader market pressures. China ETFs (e.g., FXI) have long-term potential but are currently in a corrective phase.
• Algorithmic Trading Impact: The market’s melt-up was heavily algorithmic, exacerbating moves. This, combined with new products like one-day options, amplifies volatility, making technical indicators crucial for filtering noise.
• Gold and Miners: Gold remains a strong performer, with miners (e.g., GDXU) finally gaining traction but still lagging. A potential short-term pullback in gold and miners may align with a US dollar rebound.
• Risk Management: Katie advocates for higher cash balances, selective equity exposure, and systematic strategies to navigate volatility. Toby emphasizes locking in profits from massive gains (e.g., Nvidia) to protect wealth.

The discussion underscores a cautious, data-driven approach to navigating a bearish market cycle, with a focus on technical indicators, precious metals, treasuries, and selective international opportunities.