Bear Alert Update

May 16, 2022
Bear Alert Update

SMI’s Bear Alert indicator triggered this past Friday. That means the S&P 500 put in its first weekly (Friday) close at a level more than -15% below the prior high.

That high was set a little more than four months ago on Jan. 3 — 4,796.56. On Friday, the 500 index closed at 4,023.89.

As we’ve noted on several occasions, the Bear Alert signal doesn’t carry much significance anymore. We created it as a rough tool following the 2000-2002 bear market, at a time when the SMI strategies had no other formal defensive capabilities. But in 2013 we unveiled the Dynamic Asset Allocation strategy as a "first line of defense" for our portfolios. The Upgrading "2.0" defensive protocols followed in 2018 as an additional measure to protect against deep/prolonged bear markets.

Now that we have these better-developed tools, we no longer utilize the Bear Alert as a guide.

That said, we know some SMI members still like to know when it triggers! But we suggest using the more finely-tuned tools within DAA and Upgrading 2.0 for defensive guidance.


"Bear Alert Indicator" Status

Date of high closing price of bull market

01/03/2022

S&P 500 stock index closed at

4,796.56

15% decline requires a Friday close at or below

4,077.07

Alert triggered

05/13/2022

Written by

Mark Biller

Mark Biller

Mark Biller is Sound Mind Investing's Executive Editor. His writings on a broad range of financial topics have been featured in a variety of national print and electronic media, and he has appeared as a financial commentator for various national and local radio programs. Mark also serves as Senior Portfolio Manager to both SMI Advisory Service’s Private Client managed-account program and the SMI Funds.