Caution Warranted: Better To Want In Than To Want Out

Caution is warranted as the S&P 500 and Nasdaq trade near— or just below— their 200‑day moving averages. Individual stock trading has been challenging for months, and now key leaders like NVDA have been chopping around and unable to make meaningful progress. When I look at charts of the S&P 500 and Nasdaq, I’m reminded of something William O’Neil once said: “The worst thing a stock can do is break and fail to rally.” That’s exactly what we’re seeing right now.

Last week’s market break has been followed by an extremely weak rally, and both major indexes may be forming bear‑flag patterns. This aligns with the broader environment: rising geopolitical tensions in the Middle East and the risk of further escalation. The VIX has also been spiking and remains above 20.

What concerns me even more is that sentiment hasn’t turned decisively bearish. Most people appear relatively complacent—both about the conflict and the market. The United States hasn’t experienced a war with major casualties in years, and similarly, the market hasn’t had a steep decline in nearly eleven months. That combination tends to breed confidence and complacency. Very few investors seem to be showing the level of caution that would typically accompany a market sitting on its 200‑day moving average with the possibility of major geopolitical escalation ahead.

These factors led me to move to cash last week. There will be better opportunities ahead, but the priority is preserving capital so you’re able to take advantage of them. Remember: we can always get back in. It’s far better to want in than to want out with no exit in sight. That applies both to trading—and to war.

Risk right. Sit tight.

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