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This is the first time since April that all the major indices are sitting below their 10, 20, 50, and 200 day moving averages. That’s an important detail to notice. It tells you the tone of the market changed.

If you look at the move since April it has been pretty much straight up. Now we finally see real weakness across the board. That alone is a good reason to be a bit more cautious.

You can avoid a lot of unnecessary stress if you wait for things to settle. The first sign of stability is the market reclaiming the 200 day. That one level filters out a lot of noise. If it manages to do that soon the bottom is likely in for this correction. But the longer it lives below it the risk is getting higher. Getting back above all of them would be ideal, but the 200 day is the key one to watch.

Until that happens it makes sense to stay a little more careful.

On top of that there is almost no interest in speculative names right now. There is basically zero appetite for risk. Just a few weeks ago this list was full of names. Now it is down to a handful. It has been a complete washout for momentum names.

The only positive thing is that there are still a few leaders holding up. But even that group is getting smaller and smaller. It shows how selective the market has become.

All of this basically tells you to stay patient.

There is no reason to guess what comes next. When things turn it will be clear. Once the market improves you will get a ton of opportunities. You will almost feel overwhelmed because everything starts working at the same time. But that day is not here yet. Until then it is critical to keep your risk exposure limited and have plenty of cash once it’s here. So, that continues to be main priority right now.

It is so much easier to make progress when the market is in a healthy environment. You just need to be patient enough and wait for that window to open again.

Here are a few signs to watch for:

• A clear catalyst

• A strong and steady uptrend

• Major indices trading back above key moving averages

• Several themes working at the same time

• Big gap ups on strong volume

• Gaps holding instead of fading

• Follow through days

• Little volatility

• Pullbacks on low volume

• Pullbacks getting bought quickly

• Strong closes near the highs

• Positions starting to work almost right away

• You feel like there are almost too many opportunities

• Your equity curve is moving up steadily

These periods don’t come often. When you spot one you have to lean in and be aggressive because that is when you make real progress.

This is not that kind of environment right now.

The next window of opportunity will come. It always does. And when it does you want to be ready to take advantage of it.