No Shelter
Dan Russo, CMT
March 23, 2026
Most of us have been taught that diversification provides benefits. We’re told there are assets that can be held alongside equities to smooth out the twists and turns of the market. There are even assets that may rise when stocks fall. For a 24 year stretch (1998–2022), that asset was bonds. At other times, precious metals have played that role. And sometimes, simply owning more defensive areas of the equity market can help.
Right now, very little is helping. There is no shelter.
S&P 500
The S&P 500 is now on a four-week losing streak. At the same time, it has fallen out of the consolidation zone we’ve been highlighting in this note. The next key marker in our work is the 60-week moving average. A meaningful break below this measure of trend would signal a major regime shift.
Source: Optuma
S&P 500 and the 200Day Moving Average
By some measures, we could argue that a regime shift is already underway. On Thursday and Friday of last week, the S&P 500 closed below its 200-day moving average from above for the first time since March 2025.
In fairness to the bullish trend, the moving average itself is still rising. However, many mean reversion strategies use the 200-day moving average as a long-term trend filter. The longer the index remains below it, the fewer “buy-the-dipper” remain in the market.
Source: Optuma
Consumer Staples
Within equities, Consumer Staples are typically viewed as a haven. Companies that sell what you need rather than what you want tend to perform well in times of uncertainty. However, they have not been immune to the recent selling pressure.
The relative trend has been bullish since last November, so one could argue they’ve exhibited some defensive characteristics. Still, they are declining in absolute terms.
Source: Optuma
Aggregate Bonds
The iShares Core U.S. Aggregate Bond ETF (AGG) has cascaded lower for the past three weeks. During periods of equity volatility, investors have been conditioned to believe bonds will act as a diversifier.
We’ve argued for four years that bonds may no longer play that role in strategic portfolios, and we stand by that view. Notably, AGG is now testing its 40-week moving average.
Source: Optuma
Silver and Gold
Precious metals had been on an impressive run, but even they are no longer providing shelter. Both silver and gold have decisively lost their 50-day moving averages and are no longer acting as diversifiers to equity exposure.
Source: Optuma
Final Thoughts
This is what it looks like when diversification stops working. Stocks are falling. Bonds are falling. Precious metals are rolling over. Even traditionally defensive equity sectors are struggling to provide relief.
In times like this, it is important to remember that “cash” is a position.
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