The Market's 'Canary' Looks Bleak

Editor's note: Even if you don't own shares of the market's bellwether stocks, their performance can still influence your portfolio... And to start 2026, the Magnificent Seven are stumbling. According to Marc Chaikin, founder of our corporate affiliate Chaikin Analytics, these stocks are an important signal of market strength or weakness during times of financial risk...

Things have turned bearish for the Magnificent Seven...

This mega-cap group includes Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA).

To be clear, I'm not saying that all these are "bearish" individually. Only two of them get a negative grade today in our system at Chaikin Analytics (more on that later)...

But the other five stocks aren't performing much better.

Now, it's tempting to hope this might not affect your portfolio much – especially if you aren't invested in the Magnificent Seven.

But according to the signals I'm watching, that's not the case...

Dark Clouds Are Gathering Over the Markets

Earlier this month, I warned about a potential market correction. As I told Chaikin PowerFeed readers...

Keep in mind that the Magnificent Seven collectively represent about one-third of the total weight of the S&P 500 [Index].

So if these stocks struggle... there's a good chance the S&P 500 does, too.

And in late January, my colleague Joe Austin cautioned the performance of the Magnificent Seven as a whole. As he noted, the group was already stumbling. And unless these stocks regained their strength, they could be the "canary in the coal mine" for the broader market.

We measure this group of stocks in our Power Gauge system through the Roundhill Magnificent Seven Fund (MAGS).

We use the Power Gauge at Chaikin Analytics to analyze the market. It gathers investment fundamentals and technicals into a simple rating of "bullish," "neutral," or "bearish."

Since Joe's issue, the Power Gauge has changed its tune on this Magnificent Seven fund...

It downgraded the fund to "neutral" for the first time since the "Liberation Day" sell-off last year. And the downtrend has continued.

Today, the Power Gauge gives it a "bearish" rating. And not a single Magnificent Seven stock gets a "bullish" or better rating right now.

Since January 23, the fund is down nearly 11%...

Put simply, folks... the "canary" of the markets isn't looking good.

To make matters worse, we don't know how long the war with Iran will drag on. And the turmoil adds to the risk of a heavy downturn for the markets.

The Canary Tells Investors That It's Time to Act

Two other funds are also useful indicators today...

We use the State Street SPDR S&P 500 Fund (SPY) and the Invesco QQQ Trust (QQQ) to measure the broad S&P 500 and the tech-heavy Nasdaq 100 Index, respectively.

Since the start of 2026, the S&P 500 Fund is down by roughly 4%. And the Invesco QQQ Trust is down by nearly 5%.

When we look closer at each fund's holdings, the ratings breakdown is also concerning. In both funds, the number of "bearish" or worse stocks heavily outweighs the number of "bullish" or better ones...

In the S&P 500 Fund, 153 stocks are "bearish" or worse. That compares with 78 "bullish" or better ones. As a whole, it earns a "neutral" rating in the Power Gauge right now.

And in the Invesco QQQ Trust, only 16 stocks get a positive grade compared with 37 that get a negative rating. That's why the fund receives a "bearish" grade overall.

Put simply, it's not hard to see what the Magnificent Seven canary is warning us about...

As such, you need to be prepared – and have a plan for a correction, or worse.

That's why we use the Power Gauge at Chaikin Analytics to navigate dangerous conditions – or any market conditions.

The canary in the coal mine has stopped singing. Don't be caught off guard by what's coming next.

Good investing,

Marc Chaikin

Editor's note: Last night, Marc went on camera to explain his strategy to navigate today's market turmoil. While the market has been hit hard to start 2026, he says the worst stock losses could still be on the way. That's why he just stepped forward with his timeline for the next bear market... and the one critical move you should make to prepare for every possibility.