The downtrend in the equity market continues, and we’re currently working on six straight weeks of declines in most of the major indices. Stocks in the S&P 500 Index are down nearly 5.8% since vaulting to their April highs. In late May, the index broke below its short-term, 50-day moving average. So, is this a clear signal that stocks have fallen off a cliff? I don’t think so.

The chart below clearly depicts the drop in stocks, a drop that’s been particularly pronounced since the beginning of June. As of this writing, the broad measure of the domestic equity market traded at 1,284. Yet, that’s still about 2.6% above the all-important technical support at the 200-day average of 1,251. If we see stocks fall below the 200-day moving average -- and it’s certainly possible -- we then can say that the bears are in control and that the market has officially shed its bullish disposition.

So, how do you play the situation now as an investor? Well, if you are long this market, I don’t think it’s time to panic and start liquidating positions. If you have big profits in any one position, then it can’t hurt to protect those gains. If, however, you run and sell everything here, I think you’ll regret it a month or two from now.

If you are on the sidelines with cash, then now is the time to stay there and wait to see how this market plays out. If we start to move higher, then you may want to start nibbling around the edges of the more damaged sectors out there. On the other hand, if stocks continue to falter, you won’t have your money subject to the bearish bias.

If you’d like to find out more about how to position your assets in this tricky market, then I invite you to check out my Successful Investing advisory service. We’ve bested the market for the past 30-plus years, and we’ve done it by following distinct rules that tell us when it’s time to move our chips into the pot, and when it’s time to fold our hand.