The market still isn’t showing any real strength. If anything, things under the surface keep getting weaker.

• Volatility continues to rise

• The indices are losing their key moving averages

• Crypto and other momentum names are fading

• There are barely any leading sectors right now

Because of that, there’s a good chance we’re heading into a longer period of consolidation or correction. The market needs time to cool off and reset which is completely normal after a historic run.

But there is no reason to be aggressive right now. It’s best to keep the exposure to high-growth, high-beta names low. They can deliver incredible returns during strong markets, but they also tend to fall the fastest during periods of weakness.

It is important to be in sync with the general market because during corrections everything gets sold, no matter how good the company is or how strong the fundamentals look. When investors de-risk, they sell whatever is risky first, and those are usually the high-growth/beta names.

The market will eventually improve. It always does. And when it does there will be plenty of opportunity. So, being disciplined now puts you in a far better position to take advantage of the next window of opportunity. But you can only take advantage of that if you have enough cash to deploy.

That’s why now is the time to keep your drawdowns under control. Because deep losses not only drain your financial capital but also your emotional capital. It makes it much harder to act rationally when the market finally improves. Most people underestimate how tough large drawdowns are psychologically.

The best way to start reducing exposure is to cut weak positions that are already sitting on a loss. Because the bigger the loss, the harder it is to recover. A 10% loss needs an 11% gain to break even. A 20% loss needs an 25% gain to break even. And a 50% loss requires a 100% gain. And you never know how low it can go. That’s why protecting your downside is so important.

It’s the only variable you control after you buy a position. You don’t control how much it goes up, when it goes up, or if it goes up. The only thing you control is how much you are willing to lose.

On top of that, we have the most important earnings report next week. Nvidia reports on Wednesday, and whatever the outcome is, it will definitely move the market.

Right now, less is more.