Tech Analysis 101: Navigate Stocks’ Volatility Storm

Let’s start with a simple explanation of why we talk technical analysis so much at Money Morning…

What Is Fundamental Analysis?

Fundamental analysis is all about earnings, profit margins, and revenue. It’s an essential part of long-term investing—but there’s a catch: these numbers are typically reported just four times a year.

Yes, earnings can move markets in a big way, as we’ve seen over the last two weeks. But it’s the day-to-day price action that really drives market behavior.

And what’s worse—during periods of high uncertainty—fundamental analysis starts to lose visibility. Forecasts become unreliable, guidance gets pulled, and the models used to value stocks become almost meaningless.

That’s when traders and investors need something more reactive, something that reflects what’s actually happening now.

That’s why we turn to technical analysis.

What Is Technical Analysis?

Unlike fundamentals, technical analysis is based on daily, weekly, and monthly price movement.

Tools like moving averages, RSI (Relative Strength Index), and momentum indicators track price behavior to confirm trends and forecast what might come next.

It works especially well when the entire market is watching the same signals.

That’s why I talk about the 50-day moving average all the time—it’s one of the most powerful indicators out there.

When a stock’s 50-day average is trending higher, history shows there's about a 63% chance it will move higher the next trading day. When it’s trending lower, there’s the same odds it’ll close lower.

Why does it work? Because everyone is watching it.

Switch to something like the 67-day moving average and you lose that collective effect. It’s like the old saying: if a tree falls in the forest and no one’s around to hear it, does it make a sound?

Same idea. In the markets, price action only matters if enough people are paying attention to it.

Why Technical Analysis Is a MUST Right Now

One thing this market has more of right now than at any point in the last two years is fundamental uncertainty.

If you’ve been listening to earnings conference calls this quarter, you’ve heard it straight from the source: CEOs and CFOs admitting they’ve lost visibility on what the next 6–12 months will look like. The economy is foggy. The outlook is shifting. And the old models just aren’t cutting it.

Technical analysis doesn’t lose its visibility.

Here’s the Perfect Analogy for “Why Technicals?”

Years ago, I got interested in learning to fly a plane. In the basic training, I learned there are two ways to fly: under Visual Flight Rules (VFR), where you rely on what you can see, and Instrument Flight Rules (IFR), where you fly using instruments—because weather, fog, or clouds make it impossible to see outside.

Visual Flight Rules work in calm, clear skies—just like fundamentals work when the market is stable and predictable. You can see the path, spot the risks, and navigate confidently.

But in markets like this? Visibility is gone. You can’t see the economic terrain. You don’t know where the obstacles are. That’s when you stop relying on your eyes—and start relying on your instruments.

In this market, technical analysis is your dashboard. It tells you where momentum is building, where support is holding, and where the real risks lie.

If you're not using those tools right now, you're flying blind—and that’s not a strategy for survival in today’s market.

Three Technicals You Need to Watch Now

The VIX – The Market’s Fear Gauge

• The VIX, short for the Volatility Index, measures expected volatility in the S&P 500 over the next 30 days, based on options prices.
• When the VIX is high, investors expect big swings—usually from fear or uncertainty. When it’s low, the market feels calm and confident.
• A few weeks ago, the VIX shot to a reading of 60, its highest since the last bear market in 2022. That spike screamed fear—and for contrarians like me, that’s often a sign the bottom is near. But not all fear is the same.
• Here are three things to know about that spike:
  • It was triggered by tariffs. The Trump Administration’s shocking tariff announcement blindsided markets. That wasn’t “organic” fear—it was policy-driven panic.
  • The VIX always knocks twice. I’ve tracked the VIX for over 25 years. When it spikes, it tends to spike again within weeks. A second volatility shock is likely in the next 4–6 weeks.
  • The VIX is quietly hovering around 25. Even as stocks tick higher, the VIX remains elevated. That’s a red flag. The smart money is still nervous. A close above 25 could mark the start of the next volatility storm.

Percent of Nasdaq 100 Stocks Above Their 50-Day Moving Average

• This is one of the best momentum indicators around that almost no one watches.
• You’ll hear Mike Santoli report on it from time to time on CNBC, but most investors don’t know how to track it themselves.
• Here’s the good news: it’s freely available and incredibly useful.  A link to the chart is right here.
• This percentage measures how many stocks in the Nasdaq 100 are trading above their 50-day moving average. It’s a simple way to gauge internal market momentum.
• Readings below 10% typically signal a bottom. It’s just not natural for 90% of the index to remain below that key trendline for long.
• Readings above 70% in a bear market—or above 90% in a bull market—suggest the market is stretched and ripe for a pullback.
• Right now, the number is rising, telling us the short-term trend remains bullish. But if it hits 70, especially in this environment, expect momentum to cool and the current bounce to stall or reverse.

3. The Nasdaq 100’s Key Trendlines You Need to Watch

Nasdaq 100 50-Day Moving Average

• This is the heart of the “trend is your friend” strategy.
• The trend officially turned bearish on Feb 28, 2025, forecasting a 67% chance of down days. Since then, 51% of days have closed lower.
• The 50-day now sits at $475 on the Nasdaq 100. That’s your support line for the week ahead.
• A drop below it? Expect renewed selling pressure.

Nasdaq 100 200-Day Moving Average

• This is the second most-watched trendline on Wall Street.
• The Nasdaq 100 broke below it on March 6, then failed a classic “test” of the line on March 25.
• It’s now approaching the 200-day again near $490.
• A clean break above that line? It’s a green light for gains up to $500.
• A rejection at the line? Selling likely resumes fast.

Nasdaq 100 20-Month Moving Average – The Bear Market Line

• This is the long-term trendline that separates bull from bear markets.
• The last time we crossed below this line was in April 2022, triggering a brutal 38% peak-to-trough drop.
• The Nasdaq bounced 17% after touching this line recently—but the test isn’t over.
• We’re now 21% above the recent lows. The 20-month average sits at $458.
• If we break below that again, it signals we’re back in bear territory—and the downside risk grows.

The Technical Bottom Dashboard

Fundamentals are losing visibility, but technicals are still crystal clear. In this market, you need to rely on the instruments—because the skies are anything but clear.

Here are the key price levels to watch:

• Nasdaq 100 50-day moving average: ~$475 — this is your short-term support. A break below signals renewed selling pressure.
• Nasdaq 100 200-day moving average: ~$490 — a close above confirms strength and opens the door to a run at $500.
• Nasdaq 100 20-month moving average: ~$458 — this is the long-term bull/bear line. A breakdown here signals a return to bear market conditions.

The VIX hovering at 25 while stocks rise is your warning flare. Be alert. The second spike is likely coming—and technicals will be your best guide through it.