Episode 33: Building Wealth Podcast with Steven Sitkowski (Stock Market Volatility, AI Stocks, and How to Use Moving Averages)
Stock Market Volatility, AI Stocks, and How to Use Moving Averages
The stock market has faced increasing pressure. Technology stocks have pulled back, interest rates remain elevated, and investor confidence is weakening.
But does that mean investors should panic?
In Episode 33 of the Building Wealth Podcast, Steven Sitkowski examines the recent market pullback, the challenges facing AI stocks, and why understanding market trends is especially important during periods of volatility.
He also answers a viewer question about moving averages, explaining how investors can use the 50-day and 200-day moving averages to evaluate stock trends and identify potential entry and exit signals.
Why Are AI and Technology Stocks Pulling Back?
After months of strong performance, AI-related stocks have experienced a significant correction.
Steven discusses how semiconductor stocks suffered nine consecutive losing sessions, with the sector declining approximately 16% over that period.
He explains that when stocks experience substantial gains, some investors begin taking profits while potential buyers become hesitant about purchasing at higher prices.
This can create selling pressure, even in companies with strong long-term prospects.
However, Steven emphasizes that market pullbacks are a normal part of investing and that short-term weakness doesn't automatically mean a company's long-term growth story has ended.
Higher Interest Rates and Oil Prices Remain Challenges
Interest rates and oil prices continue to influence market performance.
At the time of recording, Steven notes that the 10-Year Treasury yield was approximately 5.14%, while U.S. crude oil prices had climbed above $100 per barrel.
Higher borrowing costs can affect businesses, consumers, and the housing market. Meanwhile, elevated energy prices can contribute to inflation and put additional pressure on household spending.
Steven also discusses weakening homebuilder confidence, explaining how higher mortgage rates and home prices have made housing less affordable.
These economic conditions help explain why investors have become increasingly cautious.
What Is Market Breadth Telling Investors?
Although the broader stock market remained positive for the year, Steven highlights several warning signs beneath the major indexes.
Market breadth had been bearish for five consecutive weeks, with significantly more stocks reaching new 52-week lows than highs.
He also points out that approximately 40% of S&P 500 stocks were in bear-market territory, meaning they had declined at least 20% from their highs.
Investor sentiment reflected those concerns, with the Fear & Greed Index reaching 25, near extreme fear.
Despite these challenges, Steven encourages investors to maintain perspective rather than make emotional decisions based solely on short-term market movements.
What Is a Moving Average in Stock Trading?
The main educational segment of Episode 33 focuses on moving averages.
A moving average represents the average closing price of a stock over a specific period.
Steven explains that the most commonly followed periods include:
20-day moving average: Helps identify shorter-term price trends.
50-day moving average: A widely followed indicator for evaluating intermediate-term trends.
200-day moving average: Helps investors assess longer-term market direction.
Generally, when a stock trades above a rising moving average, it can indicate bullish momentum.
When a stock trades below a declining moving average, it can suggest bearish momentum.
Steven primarily uses simple moving averages, which give equal weight to each closing price in the calculation.
How to Use the 50-Day and 200-Day Moving Averages
Steven demonstrates how moving averages work by examining several stock charts, including Deere, CrowdStrike, Palantir, Micron, and Caterpillar.
He explains that the 50-day moving average can help investors recognize changes in momentum relatively quickly.
For example, a stock moving above its 50-day average may indicate improving price strength, while a move below it may suggest weakening momentum.
The 200-day moving average provides a broader perspective and is often used to evaluate longer-term trends.
However, Steven notes that relying exclusively on the 200-day moving average can sometimes result in reacting too slowly to a significant decline.
His preferred approach is to examine both indicators together.
A stock trading above both averages may show stronger trend confirmation, while a break below the 50-day average can serve as an early warning signal.
These indicators are useful tools, although they cannot guarantee future performance or eliminate investment risk.
Key Takeaways from Episode 33
AI and semiconductor stocks have experienced a significant pullback after strong gains.
Higher interest rates and oil prices continue to create economic uncertainty.
Weak market breadth suggests that many individual stocks are struggling despite positive major-index performance.
Investor sentiment has become increasingly cautious.
Moving averages help investors identify stock-price trends.
The 50-day moving average can provide earlier signals of changing momentum.
The 200-day moving average helps evaluate longer-term market direction.
Combining moving averages with broader market analysis can help investors make more informed decisions.
Episode 33 of the Building Wealth Podcast with Steven Sitkowski reinforces the importance of understanding market trends rather than reacting emotionally to volatility.
Whether you're evaluating technology stocks, monitoring interest rates, or learning technical analysis, moving averages can provide valuable context for navigating changing market conditions.
Watch the full episode to see Steven demonstrate how these indicators work using real stock charts.
Want to learn more about trading strategies and stock market analysis? Explore Market Mastery Group Reviews to discover what students are saying about their experiences learning with Steven Sitkowski and the MMG team.
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