The NEW Daily Decision - Checking The Playbook


The State of the Markets:

My guess is that after Wednesday's action, everyone is feeling a little better about the state of the stock market. While the bears and their algos mounted another series of attacks yesterday, good prevailed over evil and stocks managed to avoid getting hammered for a second consecutive day. Feels like progress, right?

But... Given that the S&P 500 recently tanked 6.7% over seven trading days and wound up scaring the bejeebers out of just about investors in the process, the question of the day is if the recent dance to the downside is over. To which I will reply (with tongue firmly implanted in cheek), maybe yes, maybe no.

Before you hit delete in disgust over the my response, please allow me a chance to "esplain." You see, what we've got going here is termed a "waterfall decline." And the good news is that these types of declines tend to follow a script or pattern - something I like to call the "Crash Playbook."

I've written on this subject a time or two over the years. As such, long-time readers that can recite the six stages of a waterfall decline may be dismissed. For the rest, keep reading as you may find some of this stuff useful both now and in the future. In short, professional traders all have the "crash playbook" memorized. And thus, the patterns tend to repeat. So, let's review...

Stage 1: The Initial Dive

The initial move of a waterfall decline is easy to identify. It's the gut-wrenching selling where the indices shed points at a rate that boggles the mind. The 838-point decline on the Dow Jones Industrial Average on October 10 qualifies here. As does the more than 500-point dive seen the following day ...

Read More
Comments

The NEW Daily Decision for 10.15.18 - Understanding The Algos and Systematic Sellers


The State of the Markets:

Before we dive in to any sort of subjective analysis about the current state of the markets or what may or may not come next, I think it is important to note that our Indicator ...

Read More
Comments

The NEW Daily Decision for 10.12.18 - What Is Real And What Is Artificial?


The State of the Markets:

What a difference a few days can make in this business, right? Seven days ago, the Dow closed at a fresh all-time high. The market narrative at the time was well known. The economy was ...

Read More
Comments

The NEW Daily Decision for 10.11.18 - Assuming The Worst


The State of the Markets:

Not surprisingly, I spent much of yesterday afternoon on the telephone speaking with advisors about what the heck was happening in the stock market. With the Dow just five days removed from an all-time high ...

Read More
Comments

The NEW Daily Decision for 10.8.18 - Time To Hit Reset?


The State of the Markets:

As long-time readers are aware, the main objective of my oftentimes meandering market missive is to identify the driving forces behind the action in the stock market. For the past 20+ years, my thinking has ...

Read More
Comments

The NEW Daily Decision for 10.3.18 - TRADE ALERT EXPECTED TODAY

The NEW Daily Decision Portfolio

NOTE: TRADE ALERTS LIKELY TODAY

Our Risk Managed Growth System is telling us to reduce exposure today. As such, we will be cutting our positions in SSO and QLD in half.

------------------------------------------------------------------------------------------------

The latest upgrade to ...

Read More
Comments

The NEW Daily Decision for 10.1.18 - Bulls Remain In Charge, But...


The State of the Markets:

It was a busy weekend filled with family, travel, and the passing of a pet, so I'm going to skip the subjective analysis of the stock market and let the indicators do most of ...

Read More
Comments

The NEW Daily Decision for 9.24.18 - Will Valuations Spoil The Bull's Party?


The State of the Markets:

In spite of the escalating trade "skirmish" and a long list of purported negatives, stocks continued to trudge higher last week with the DJIA finishing at a new all-time high on Friday. The S&P 500 ...

Read More
Comments

The NEW Daily Decision for 9.17.18 - The Good, The Bad, And The Ugly


The State of the Markets:

My quote system confirms that stocks finished higher on the week and that the S&P 500 gained ground all five days last week. And with the venerable index closing Friday at the second highest level ...

Read More
Comments

The NEW Daily Decision for 9.10.18 - What If Something Bad Actually Happens?


The State of the Markets:

In case you have somehow missed it, the ten-year anniversary of Lehman's collapse is upon us. The fall of Lehman Brothers, and perhaps more importantly, the fact that Wall Street didn't bail out ...

Read More
Comments

The NEW Daily Decision for 9.4.18 - The Pause That Refreshes?


The State of the Markets:

Now that the S&P 500 has managed to move to new all-time highs, the obvious question becomes, where do we go from here?

Our furry friends in the bear camp contend that the prolonged period ...

Read More
Comments

The NEW Daily Decision - A Step In The Right Direction


The State of the Markets:

It always seems to happen this way. Last week the title of my lone missive was, "All is not right with the world." The key point I wanted to make was that while the U ...

Read More
Comments