The S&P 500 is flashing a warning sign. How to protect your portfolio.NEWS | 25 March 2026The S&P 500 crossed below its 200-day moving average last week as the benchmark index continues to struggle in 2026.
While it's not always a sure sign that a bear market is on the way, it's a potentially worrying signal that the market could be headed into a downward trend in the months ahead.
The technical level has historically been crossed at the beginning of every bear market since at least 2000, according to an analysis by Lance Roberts, the chief investment strategist at RIA Advisors, which oversees around $2 billion in assets. During those episodes, the S&P 500 has ended up, on average, 4.8% lower six months after the moving average was crossed.
Stocks have endured a rough few months as surging oil prices, a weak jobs report, sticky inflation, and AI disruption have derailed investors' optimism.
How do you know if things are going to keep getting worse for stocks? Well, it's important to watch for updates to the market's fundamental drivers — the issues listed above. But technical indicators can also offer clues.
In a report on Monday, Roberts laid out a checklist of six criteria to watch for:
The S&P 500 200-day moving average is still moving downward
The moving average convergence/divergence indicator is dipping into negative territory
The index's relative strength index is below 32
American Association of Individual Investors' sentiment survey shows at least 45% of investors are bearish
More than 40% of S&P 500 stocks are trading below their 200-day moving averages
The 200-day moving average has crossed below the 50-day moving average
Right now, only two of those things are true, Roberts said: 46% of stocks are trading below their 200-day moving average, and the moving average convergence/divergence indicator is still falling.
That said, it's still too early to know how the market will fare, Roberts said, but it's still important to prepare your portfolio for near-term downside.
6 steps to protect your portfolio
He shared several steps for taking risk off the table, starting with trimming your largest positions.
"Reduce concentration in your highest-valuation, highest-conviction holdings by 20 to 30 percent," Roberts wrote. "You're not betting against recovery — you're limiting the damage from a potential 12 to 15 percent further drawdown before the low is confirmed."
Hand-in-hand with that recommendation is to hold at least 10%-15% of your portfolio in cash. That way, you'll have money waiting on the sidelines waiting to buy if stocks go lower.
Third, Roberts said to lean more into the quality factor and less into growth stocks. Characteristics to look for in a quality stock include a pricing power, a strong balance sheet, and high free cash flow levels. The Vanguard U.S. Quality Factor ETF (VFQY) is one example of a fund offering exposure to quality stocks.
Fourth, up your allocation to the utilities, healthcare, and consumer staples sectors, as they've historically behaved defensively when the broader market and economy is in trouble.
Fifth, for more volatile stocks like cyclicals, adjust your stop-losses to allow for downside of just 7%-10%, Roberts said.
And finally, move up the average duration of your Treasury exposure to the five-to-seven year range, Roberts said. Yields are higher there than at the short end of the yield curve, and medium-and-longer duration bonds tend to increase in value if the economy starts to falter.Author: William Edwards. Source
