The NEW Daily Decision for 11.12.18 - Understanding the Current Earnings Game


The State of the Markets:

When stocks enter a corrective phase, the main question investors tend to ask themselves is, has anything changed from a macro point of view?

One of the problems with trying to answer this question is that corrections generally are born out of a period of high confidence and/or complacency. A period where everyone knows the bullish case. A period where everyone is confident about the outlook. And a period where everyone "knows" what is going to happen next. Well, until something changes, that is.

The point is that when you are comfortable with your premise and everyone agrees with your view, seeing a change in the environment can be tough. Things are going well. Nobody wants anything to change. So, first understanding and then accepting the facts that (a) something is changing and (b) you may need to make adjustments to your portfolio strategy, can be challenging.

From my seat, we are seeing this type of scenario play out in the here and now. For example, one of the key fundamental drivers of the current bull market cycle has been robust corporate earnings. Make no mistake about it; earnings have been strong and have been consistently coming in above expectations. In fact, analysts project that EPS (earnings per share) growth for the S&P 500 will come in at 26.4% for calendar year 2018. Impressive.

Yet during the current earnings season, stocks have generally not been rewarded for their earnings/revenue "beats." Companies report earnings and revenues that are above expectations, management says good things about the business, and the stock proceeds to decline. What gives?

Heading The Wrong Direction

Besides the obvious worries about the impact of tariffs and rising rates, there appears to be something bigger at work here. As in, this ...

Read More
Comments

The NEW Daily Decision for 11.9.18 - Portfolio Update


Today's Portfolio Review

Despite the recent "bounce," we continue to maintain a modestly defensive position (net long exposure currently stands at 89% and each of the strategies holds some cash) at this time. The reason is simple. Historically, when ...

Read More
Comments

The NEW Daily Decision for 11.5.18 - Garden-Variety So Far, But...


The State of the Markets:

I've got an early meeting (who's idea was it to schedule a board meeting for 7:00am on a Monday??) and I am traveling the rest of the week, so I'm up ...

Read More
Comments

The NEW Daily Decision for 11.2.18 - Of Jobs, Apple, and Trade


Portfolio Strategy Update:

As long-time members know, we don't spend a lot of time (almost none, actually) touting our views on the market or making "calls" about what to expect next. In our more than 40-years of combined market ...

Read More
Comments

The NEW Daily Decision for 10.30.18 - Two Ways To Improve The Mood


The State of the Markets:

There can be no denying that we've got a nasty market on our hands. A market where the venerable Dow Jones Industrial Average can be up 300 points one moment and down 600 the ...

Read More
Comments

The NEW Daily Decision for 10.29.18 - How Low Can It Go?


The State of the Markets:

Are we having fun yet? To be sure, the recent stock market correction has created some angst as the bears have knocked -7.55% off the DJIA, -9.63% off the S&P 500, -12.60 ...

Read More
Comments

The NEW Daily Decision for 10.22.18 - Sifting Through The Conflicting Evidence


The State of the Markets:

From my seat, the most important question on this fine Monday morning is if stocks are currently in the "retest" stage of a waterfall decline, which means that we are likely closer to the end ...

Read More
Comments

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 ...

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

Reviews Average Rating          

         
5 star all the way. Your insight and knowledge is very helpful. Analysis, charts and conclusions are sound.
         
See All Reviews →