The Whole Tenor Of The Market Just Changed | New Harbor Financial

**Michael Preston** (0:00)
I think it's pretty significant to say that we haven't seen that often for straight down weeks like this. We haven't touched the 50 week moving average since last year. So we're seeing a change in character.

**Adam Taggart** (0:19)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart. Today, we are resuming our monthly discussions with the team at New Harbor Financial, one of the endorsed financial advisory firms here by Thoughtful Money. And gentlemen, it could not be more timely. So folks, as usual, I'm joined by lead partners, Michael Preston and John Lodra. I think today, the S&P has officially entered a correction phase in terms of having dropped by over 10%.
Gold has hit an all-time high. So there's lots going on. A lot of things that you guys have been basically over the past months telling us to watch out for seem to be underway in real time. So let's just dive right in. Let's actually talk about the downwards action in the markets. John or Mike, which one of you guys wants to go first?

**Michael Preston** (1:08)
Really either one of us. Why don't I just kick it off here, Adam? You're right. The S&P is now in correction territory. It's down, looks like 10.3% from the high. I will bring up a chart so I can share, and we could talk about a few things on the chart and give you our quick feedback and perspective.

**Adam Taggart** (1:28)
As you pointed out, Mike, let me just let folks know. So we're recording this at the end of the day on Thursday. So there's one more day left in the market action before this video is going to go live. Also, the day that we're recording this is two days before Thoughtful Money's spring conference. So when this video launches, it'll be Sunday, the day after the conference. If you missed the conference, folks, it's going to be such a great event. But if you missed it and are regretting that given all that's going on in the markets, you can still buy a replay of the entire event. It's already available for purchase, all the presentations, all the Q&A's. To do that, just go to thoughtfulmoney.com/conference. All right, Mike, you got the baton again.

**Michael Preston** (2:14)
All right, so back to the chart. Here's the S&P 500 on a daily chart, down around 10.3%.
One thing to note here is this has been a pretty relentless decline. We went right from all-time highs, which is right up here, 6147.43.
And that high was just higher than a recent top edge of a triangle here. So it's a pretty classic textbook, bullish triangle breakout to new highs. Well, we went straight from that, straight down. There's been almost no reprieve here. This light green line is the 21-day moving average. We haven't touched the 21-day moving average in 10 or 11 days. And, you know, it seems to have been actually increasing in slope. So it's been a pretty steep decline. Now, overall, it hasn't been that big of a deal yet, other than it's now brought us negative on the year, right at this back here where my arrow is, is the beginning of the year. It looks like we're down around 5%, 6%, 7% on the year on the S&P. If we were to take a look at the NASDAQ 100, it's even a little bit more severe. That's down 12% to 14%, the same straight line on the NASDAQ, right through the 50-day moving average, which is the red line, right through the 200-day moving average, which is the green line, and really hasn't even bounced, just hasn't even noticed these things, and hasn't touched the 21-day moving average. So, it has been a pretty swift decline. It's been even more concentrated in the momentum names. Take a look at this ETF. This is the IBD 50, the Investors Business Day top 50 It dropped close to 30% in a straight line. So, hasn't happened that often. If I go back to the S&P, and I change to a weekly chart, you'll see that as of right now, it's Thursday, we're working on four straight weeks down. One, two, three, four. Look back over the last couple of years, it hasn't happened much, hasn't happened often. It happened during the Japan Swoon last summer. The fourth week ended in an up bar, a key reversal, and who knows? It's possible that we have a key reversal coming up, maybe even as soon as tomorrow, to change the shape of this bar. But I think it's pretty significant to say that we haven't seen that often four straight down weeks like this. We haven't touched the 50-week moving average since last year. So, we're seeing a change in character. Our short-term indicators have reversed into defense. You know, they're getting a little bit stretched, but they're not extreme yet, which says that we could have further downside. I think the key point here, Adam, is we're not guessing, you know, we're not trying to predict. We have a system in place that hedges our risk. The chart that I just had up, I know that I stopped sharing it, showed a line, and maybe I'll re-share it again, just for the sake of clarity. There's a line where we have our hedges. We just adjusted our hedges. They were up at 5700, right up here, for March, and we just rolled those out the other day, down to 5400 and rolled them out to April. This is on 15% of our portfolio. We have 40% stock right now. So as we go down near these hedge lines, we're automatically reduced to 25% stock, and we take some profits on those hedges. Now, it's not perfect. There's costs to hedges, and there's a deductible, where you see the space between the price and that hedge line. But still, even with all of that, we're still slightly up on the year in positive territory in our main model, for most accounts, and the market's down 6% to 12%, depending upon which index you look at. It should be stated, to be fair, that this is a short period of time. Other periods of time might be different. But as of right now, this is how we see things, and what our experience is. We're looking to get good, consistent, fair returns. We don't need big returns. I mean, being only 40% in stocks is not going to give you big returns, no matter what happens. But we're trying also not to lose on the turn. We don't know if this is it. Is this the one? Is this the top in the market, and now we're going to crash? Or is this a pause that refreshes? Well, you know, maybe John will talk a little bit more about that. We'll make some guesses later on. But so far, we just don't know. We don't know. And so, therefore, this is how we're managing it and trying to have it have decent results, no matter what happens.