The title of this post comes from a quote in the movie Star Wars: Attack of the Clones (2002). This quote is so appropriate for anyone who chooses to invest in the financial markets but learning how to apply it can prove difficult. In this post I will explain why.

This past Friday the Dow Jones Industrial Average dropped almost 900 points, and the media had a field day. They pushed out headlines to grab peoples’ attention providing potential reasons why it happened. On Sunday evening, CBS teased their 60 Minutes show with comments about the possibility of a stock market “crash.” This tends to take place almost every time the market makes any type of relatively sizable move, especially when to the downside. But how often do people ask, when was the last time the media ever forecasted a major crash before it crashed? The answer is never, which begs another question–why do people continue tuning into the media as if they have the answers?

I believe the market gives us everything we need to know once we can understand its language. The chart below shows the arithmetic version of the S&P 500 Index through this past Fridays close. (The arithmetic scale is a slightly different version compared to the logarithmic scale I typically display in these posts, but I believe it provides us with a slightly better perspective for the reason why the stock market is dropping right now.)

This chart represents almost six years’ worth of time, and you will notice that almost all of the price behavior has taken place within a rising trend channel (bounded by the two rising green dashed lines). In the past, whenever price has tried to break out of this rising channel, it has been turned away as identified by the downward red arrows. In recent months however, price has broken out above the top green line, at least temporarily. Now the “retest” should take place, which is typical technical action in the stock market. IF price declines further to the top green line (identified by the red and green arrows) and holds that line, then a price rally should ensue. If it doesn’t hold that line, then it simply suggests a deeper price correction could unfold.

 

STOCK MARKET, THE TREND:

Chart courtesy of StockCharts.com, Data as of 10/10/25

 

The likelihood of a “crash” as defined by historical events like 1929 or 1987 are highly unlikely, at least at this stage of this secular bull market. But it is these types of headlines that get “clicks” and grab people’s attention, which feeds the media machine. The reason why I titled this article as I did is because the thoughts or ideas the media programs into peoples minds can lead them to false conclusions (“the stock market is going to crash?!?”) which can result in their making emotional decisions that can betray them (i.e. selling before we reach the final stock market top).

 

STOCK MARKET, WATCHING FOR THE SUMMIT:

 

Chart courtesy of StockCharts.com, Data as of 9/30/25

 

For clients, I hope this helps alleviate concerns you may have right now. Remember, the BLUE LINE INVESTING strategy was designed to adapt to changing stock market trends. We can be confident the trend has changed to the downside once price drops below and remains below the Blue Line. Until then, I will continue to apply selective protective hedges using inverse ETFs as the strategy demands.

The S&P finished the month of September 10.0% above the Blue Line, compared to 8.5% above the Blue Line at the end of August. As I have written over the years, whenever the price of the market gets about 10% above the Blue Line, it opens the door to a potential price correction. I typically use price corrections as potential opportunities to invest idle client money that has been sitting on the sidelines. You can find more information about price corrections, which are one of the three types of stock market risks in Chapter 5 of my book.

 

Jeff Link

 

Disclaimers:

The BLUE LINE INVESTING® (BLI) investment process was founded on over 95 years of stock market history. It seeks to identify and align investment decisions with multiyear trends. Various aspects of this process have been illustrated in my book Protecting The Pig: How Stock Market Trends Reveal the Way to Grow and Preserve Your Wealth.

The S&P 500 Index is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy. It is comprised of 500 large companies having common stock listed on the NYSE or NASDAQ. The volatility (beta) of the account may be greater or less than the index. It is not possible to invest directly in this index.

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volumes. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets may not always follow patterns. There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical analysis is one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity. The opinions expressed are those of BLI. The opinions referenced are as of the date of publication and are subject to change without notice. BLI reserves the right to modify its current investment strategies based on changing market dynamics or client needs.

Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. The information contained herein should not be considered a recommendation to purchase or sell any particular security. Forward-looking statements cannot be guaranteed.

Investment advisory services offered through Guardian Wealth Advisors, LLC D/B/A Blue Line Investing. Guardian Wealth Advisors, LLC (“GWA”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about GWA’s investment advisory services can be found in its Form CRS or Form ADV Part 2, which is available upon request.

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