When market breadth indicators (percentage of stocks trading above 50-day and 20-day moving averages) decline below 50% and trend downward, it signals a cooling period in the market, particularly after parabolic moves in sectors like semiconductors and AI. During such periods, investors should rotate into defensive sectors (energy, consumer staples, dividend stocks), control position sizes, use stop losses, and consider income-generating strategies like covered calls and cash secured puts to generate returns regardless of market direction.
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🚨Stock Market Indicators Flashing Warning Signs ⚠️ 5/12/26Added:
All right, guys. I played Micron three times today. The first time I played it from $760 to 775 780. That was first thing when the market opened. And then I got stopped out. And then I played it again.
Bought it at 7:48. I put my stop loss at 7:39 and that hit. So I took a small loss there. So overall was up a little bit from my first two trades. And then I decided to do another one, which you guys know in my video I put out earlier.
I said, you know, Micron's a good price at 7:12 right now. I played it up to 7:50. So that was a nice win. So overall very good day. But this is where again, the the writing's on the wall, guys. I I saw I noticed two things in the market today. One, the breadth of the market got worse again. So I I mentioned that in my video yesterday. So the stocks that are trading above their 50-day moving average has now dropped below 50%. You want to hold that 50% line ideally and that has dropped just below that and it's been trending down, okay?
And then also stocks trading above their 50-day or sorry, their 20-day moving average also has been trending down and it's in the lower 40% area, okay? So that has signaled in the past, if you look at history with the charts, when when that happens, that shows there has um been a cool off period that's happened in the market, which totally makes sense to me with the parabolic move we've made, right? In the semiconductor and AI space right now. So just remember that, guys. We've had unbelievable wins in the space and you just have to know what goes up quick will eventually get filled first. So just be prepared, you know, for that to happen at some point, okay?
And if you don't want to mess around, this is why I'm teaching VIP members how to sell covered calls, which is an excellent time right now, guys, to do that cuz you collect a premium from placing the order and you get to pick the price you want to sell your shares at and you get a profit on top of that.
So it's a double win, which is the best, guys. And then there's great opportunities for cash secured puts, too. Just have to know where to look and this is where I constantly give VIP members, you know, stock plays where you can do this on, okay? Every week and this is where you can make at least 15% per year, 20, even 25%, but at least 15% depends how conservative or aggressive you want to be.
But it's amazing growing our nest egg safely over time and regardless of whether stocks go up or down, we make money, guys, okay? So, I'm telling you it's a game changer once you learn how to do this and remember the I teach you how to do this with the one-on-one Zoom session and then we place the order together and you make that money back for the VIP price plus a lot more, guys, okay? And remember these Zoom sessions include portfolio review, Q&A, trade/investment planning. You also get my monthly top stock picks, all my other membership perks like gift card competitions, educational videos, other stock picks, and then all my portfolios, guys. So, that's really what's going to take your game to the next level. And again, it's all about bringing in cash flow and growing your money consistently over time and knowing when the risk outweighs the reward and that's where we're at, guys, after this parabolic move. So, that's with the semiconductor and AI, you know, the AI infrastructure stocks, right? That have had unbelievable runs. We're talking 100% plus, guys, we've made with many of these stocks, okay? That's an anomaly, remember it doesn't happen all the time.
So, I'm treating that as a gift and now I'm have more money to grow it, right?
Doing cash secured puts and covered calls, guys. So, that's where it's at.
So, anyways, breadth of the market, that was number one I saw that's getting worse. And then number two, we clearly saw rotation into defensive names where we saw money go into the energy sector, we saw it go into consumer staples, you know, dividend stocks, for example.
Also, some into financials. And so, that's another sign that we are starting to rotate, okay? So, again, just be more cautious. You can still play things, it's just controlling the position size, using a stop loss. And at this point, you know, with my short-term trading account, I'm really just focusing on in and out trades, you know, same day cuz we we know anything can happen, right?
Overnight risk and we have many things going on this week as we know, guys. So, and then obviously long-term, nothing wrong with just playing with house money, guys. That's how I like to do it.
So, I know I can't lose anything. We're you know, I've already taken out my initial investment with probably about 85 to 90% of my stocks in my long-term account. And so, I'm just going to keep letting that ride, obviously. And the only way I add to that is when we get really good dip opportunities and obviously a lot of these AI semiconductor stocks have gone parabolic. So, that's not the time to buy, right? You want to wait for dips.
Whereas, obviously other areas like the software sector, but if you know where to look, there's some really good opportunities in there, okay? Like best in breed name Microsoft, even though you know, they're ties to open you know, open AI and chat GPT. I understand, you know, it's out of favor right now and like meta for example, out of favor, okay? But there are opportunities out there still. There's always right a bull market somewhere, guys. And so again, I'm here to help you with that and again, I have great ideas for you to sell cash secured puts to make premium or income. And then also for selling covered calls, guys. So again, VIP membership is where it's at, guys. I'm telling you, you won't regret it. And I'll put that link in the description in the comments. And then like I said, once you sign up, just email me at Brett with two Ts, the stock picker at gmail.com and we will line up our first one-on-one Zoom session, guys. Have a great night.
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