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The market is rife with volatility as investor sentiment flips between ‘fear’ and ‘fear of missing out’. The recent move of the Nasdaq 100 below the 200 day moving average nudges the market towards a bearish trend.

The biggest problem surrounding markets is the impacts of tariffs on global trade and negative investor sentiment. Investors don’t have any certainty about the impacts of tariffs and therefore aren’t able to adjust their portfolios accordingly. The current mood provides an opportunistic ‘buy the dip’ opportunity; thought it is important to keep the following in mind.

Keep this in mind

Firstly, the 50-day moving average provides a picture of the market. When this begins trending higher, the markets become your friends, and vice-versa. This can be analysed through broad market indexes such as the S&P 500 or Nasdaq 100. Historical evidence points to this being a useful indicator of the bullishness of markers.

Secondly, we can assess the momentum of the market by analysing when the 20-day moving average crosses the 50-day moving average. The exact pattern emerged when the Nasdaq 100 gained negative momentum on March 6. Should these moving averages cross again, a more promising opportunity to buy is created.

Bottom Line

It is needless to say that the long term investor should stay patient at times with major market headwinds. It is important to stay diligent and diversify your portfolio during these times.