# My Edge Saves You from Market Mayhem

Canonical: https://tradersdailydirection.com/my-edge-saves-you-from-market-mayhem/

When the big stock market indexes take a quick big dive – the natural instinct for many is to flee.

And this comes particularly as the big indexes including the Dow Jones Industrial, S&P 500 and Nasdaq Composite drop by more than 1.00%.

But I want to take a moment to explain that **fleeing can do more harm for you and your portfolio** – particularly if you don’t fully have the facts about these indexes.

And in a moment, I’ll show you **how my stocks that I present to you and place on my Watch List inside my _[Traders Daily Direction](https://tradersdailydirection.com/ssi-in-action-video-of-my-scor/)_ have a special edge that can keep them away from the mayhem – and even set up great trades for you.**

And to get the rundown on my current [Watch List stocks](https://tradersdailydirection.com/ross-watchlist/).

## **What Happened & How to Prosper**

Stocks opened lower on Thursday thanks to new data on the virus _Delta_ variant.

The [Dow](https://tradersdailydirection.com/tag/dow-jones-industrial/) gapped down 400 points, and most growth stocks were in the red.

This is the first sign of blood we have seen from the index in a couple months.

But warning signs have been flashing…

Take a look at this chart:

![What Happened & How to Prosper](https://www.tradingview.com/x/Kx64RoGP/)

The candlestick chart on bottom is the [NASDAQ](https://tradersdailydirection.com/tag/nasdaq/) Composite Index.

Above, the percentage of stocks trading above their 50-day moving average.

As you know, I watch the 50-day to determine the short-term trend.

In a healthy market, the majority of names should be above this level.

At the start of the year, 80% of stocks traded above it.

Today, that number is down to 43%.

So even though the index has drifted higher, the number of stocks in short-term uptrends has come down.

Now don’t get me wrong – this is not a red flag sending me to 100% cash.

But for me, it is a sign to be cautious.

## **_Indexes are market cap weighted._**

Large companies like Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL) have a much greater impact on their performance than smaller names.

[B. Riley Financial](https://tradersdailydirection.com/tag/b-riley-financial/) (RILY), one of the stocks on my watchlist, is worth $2 billion.

Apple (AAPL), on the other hand, is worth $2 TRILLION.

So, a 1% move up in AAPL has the same impact on the Nasdaq index as a 1,000% up move in RILY.

In other words, a small handful of stocks dictate the bulk of the index’s move.

I prefer to trade in smaller names.

That’s where I have an edge.

## **My Big Edge for You**

Because I tend to focus on **smaller stocks - these are the stocks that can make big, fast moves**.

Unfortunately, the performance of **small caps can get lost** in the index.

That is why I watch the percentage of stocks above the 50-day moving average.

### **It is a better barometer for the health of the market**.

After the virus selloff in March of last year, I waited until 50% of stocks were above their 50-day moving averages to provide confirmation that it was time to get back in.

![It is a better barometer for the health of the market.](https://www.tradingview.com/x/y94CE3l2/)

Hopefully, it will help you as well as that is my goal here at _Traders Daily Direction_.

## **Another Edge for You:**

I am ramping up my insider stock buying research that is part of my _Surge Stock Indicator (SSI)_. This takes identified buys and then turning to my proprietary technical chart analysis with a focus on under the radar smaller stocks.

I have developed a new product that we’ve just launched here at Traders Agency called _[Insider Edge](https://buyinsideredge.com/replay/?tambid=4221)_. **And this is all about one of my common-sense tools** that finds stocks with big surges in insiders’ buying their own shares. **And in turn, using my chart analysis to find out if the insiders are right about a stock set to surge.**

And to get the full rundown on how to profit by buying stocks that insiders are buying right now, you learn more about my _Insider Edge_ at Traders Agency. [Click here to watch](https://buyinsideredge.com/replay/?tambid=4221)