MARKET WARNING ⚠️ We Broke the 50-Day SMA (Stop Buying Dips!)

What's up, Studs? We have a lot to unpack today. The stock market has officially broken under the 50-Day Simple Moving Average (SMA).

I have been trading my whole adult life, and if there is one rule that saves you money, it is this: When the market is under the 50 SMA, you must be extremely careful.

The Strategy Shift: Momentum vs. Distribution

When the market is trending above the EMAs, you can get away with "stupid shit"—chasing breakouts, averaging down, holding overnight. You usually get bailed out.

But under the 50 SMA, the rules change:

1. Stop Holding Longs: Overnight gaps become dangerous (just look at what happened to $AVGO).
2. No More Breakouts: Flat-top breakouts often peak their head above resistance and then rip back down immediately.
3. Day Trading Only: This is not an environment for swing trading. Cash is king overnight.

The "1 AM Setup" Warning (Rivian)

Be careful with charts that only look good because you are desperate. I call this the "1 AM Setup."

• The Scenario: You're at the bar, it's 1 AM, and suddenly everyone looks attractive because it's "Last Call."
• The Stock: Rivian ($RIVN) has a lot of wicks. It looks okay if you squint, but it's messy. It needs to tighten up before it becomes a "7 PM Setup" (a legit high-quality trade).

The Watchlist: A "B- Minus" List

This is a defensive watchlist. We are looking for specific reactions, not aggressive entries.

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LONG WATCHLIST (Cautious)

• AVGO (Gap Down Only): If this gaps down to the lower Bollinger Band ($315-$327), I will look for a bounce. If it gaps up, I'm fading it.
• TSLA (Relative Strength): The price action is good, and it rebounded nicely on Friday. It's the only tech stock I'm really watching.
• LULU (Bottoming): The earnings reaction suggests the bottom is in. Waiting for it to tighten up.
• UAL / BA (One-Offs): Airlines and Boeing have flat-top breakouts, but in this market, they might lack the momentum to follow through.

SHORT WATCHLIST (Bear Flags)

• AMD (Bear Flag): Rolling over and taking out ranges. Room down to $194.
• NFLX (Weak Structure): Every bounce gets faded. A "baby bear flag" is forming.
• MU (Earnings Fade): If Micron gaps up on earnings (Wednesday), I am looking to fade it immediately on a 2-minute chart. The AI trade is tired.
• MSTR (Bear Flag): Gapped up and faded. Looking to short pops.

Big Thing when the market gets dicey guys is to look for stocks that got news out. Both up and down. Here is a great blog on the news sources I personally use! Check it out HERE:> https://www.bullsonwallstreet.com/post/stock-market-news-guide

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🖋️ About the Author

Kunal Desai is the founder of Bulls on Wall Street and a veteran trader with over 20 years of experience. He’s trained thousands of traders to master setups, develop discipline, and trade consistently in real time.

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