Mish's Market Minute

Weekend Daily: Tips for Trading Profitably in a Bear Market

Mish Schneider

Mish Schneider

Director of Trading Education, MarketGauge.com

Many investors have had a rough year.

2022 has been characterized by turbulence in financial markets. The Nasdaq Composite, S&P 500 Index, and Russell 2000 are all in bear market territory, while the Dow Jones is the only U.S. index down less than 10% YTD. The performance of U.S. indexes year to date paints a grim picture: Nasdaq (QQQ) -33%, IWM (-23%), SPY (-20%), and DIA (−9%).

Returns for investors range from smaller profits to substantial losses, depending most likely on whether they deployed passive or active strategies and whether any funds are allocated towards alternative assets, like commodities. Rigorous analysis and a trading plan are crucial to trading successfully in bear markets. Commodities are volatile, and it's essential to have stops and profit targets for commodity trades.

The chart below displays the performance of Silver (SLV) at 26%, Sugar (CANE) at 12%, the Vanguard Value ETF (VTV) at 11%, Gold (GLD) at 9%, and the Vanguard Growth ETF at -3% over the last 90 days.

The S&P 500 Index began declining in early January and officially entered a bear market on June 13, 2022. Inflation, higher interest rates, and increased geopolitical tensions all contribute to persistent concerns in the present bear market and will likely continue in 2023.

The Stock Markets at a Glance

  • The early 2000s dot-com bubble led to the second-longest bear market in history, which lasted 929 days and a 49.1% decline.
  • The March COVID bear market in 2020 was the shortest in history, lasting 33 days and declining 33%.
  • Excluding the longest and shortest bear markets, the average length of a bear market is around 330 days—just under one year—and more extended bear markets are closer to two years.
  • The average bear market drawdown is approximately 33%.

If today's stock market follows a similar time and price trajectory, the current bear market will last much longer than many people anticipate.

  • Market conditions and price action will ultimately decide whether the S&P 500 Index sees lows of 3300, 3250, 3000, 2900, or even lower.
  • The S&P 500 Index faces overhead resistance at 4,000, 4,100, 4,150, and, on overhead resistance, 5,000, which will be a number that will be hard to cross for a long length of time.

At MarketGauge, we take advantage of down trends and bear market rallies if we can profitably participate. Despite volatile financial markets this year, we are proud that many of our investments have held firm and have even grown. This provides confidence in our proprietary investment strategies and our ability to manage strategies for maximum returns while limiting drawdowns. And, fortunately, we have seen success with several strategies delivering positive returns despite these trying times. The chart below shows a recent sample of a few profitable trades.

Rigorous analysis and a well-crafted trading plan are crucial to trading success in bear markets. It also helps to have multiple decades of trading experience at your fingertips and proven trading indicators to guide you.

As 2023 approaches, it's helpful to keep in mind the lessons of the past while focusing on executing risk-managed trades that are profitable today, like silver, as an example highlighted below.

If you're interested in learning more about how MarketGauge can help you trade with an edge, contact Rob Quinn, our Chief Strategy Consultant, who can provide more information about Mish's Premium trading service and other trading strategies we offer with a complimentary one-on-one consultation.

"I grew my money tree and so can you!" - Mish Schneider

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Mish in the Media

In this appearance on Business First AM, Mish discusses why she's picking Nintendo (NTDOY).

Mish sits down with Gav Blaxberg for a W.O.L.F podcast on what she has learned as a trader and teacher.

In this appearance on Business First AM, Mish explains how even the worst trade should not be too bad with proper risk management.

In this appearance on Real Vision, Mish joins Maggie Lake to share her view of the most important macro drivers in the new year, where she's targeting tradeable opportunities, and why investors will need to keep their heads on a swivel. Recorded on December 7, 2022.

Mish sits down with CNBC Asia to discuss why all Tesla (TSLA), sugar, and gold are all on the radar.

Read Mish's latest article for CMC Markets, titled "Two Closely-Watched ETFs Could Be Set to Fall Further".

Mish talks the current confusion in the market in this appearance on Business First AM.

Mish discusses trading the Vaneck Vietname ETF ($VNM) in this earlier appearance on Business First AM.

ETF Summary

  • S&P 500 (SPY): 380 support, 390 resistance.
  • Russell 2000 (IWM): 170 pivotal support, 180 resistance
  • Dow (DIA): 330 support, 337 resistance.
  • Nasdaq (QQQ): 269 support, 278 resistance.
  • Regional Banks (KRE): 53 support, 61 resistance.
  • Semiconductors (SMH): Support is 205, resistance 217.
  • Transportation (IYT): 211 pivotal support, 222 now resistance.
  • Biotechnology (IBB): 130 is pivotal support, 139 overhead resistance.
  • Retail (XRT): 57 pivotal support, 63 now resistance. Regained 60.

Mish Schneider


Director of Trading Research and Education

Wade Dawson


Portfolio Manager

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More