Thursday, February 8, 2018

Your Daily Dose of Perspective: Awfully Windy Up There!

While I suspect we've said about all there is to be said about the present state of the market and the economy (btw, economic data has only gotten better this week [hence the interest rate fear]), we're feeling we should pop in on you, nonetheless, given this morning's 600+ point decline in the Dow. 

For starters, all week we've been warning that the market likely has more work to do on the downside before it establishes what technicians call a new support level. So, if you've been tuning in here, today should be no surprise whatsoever.

Aside from that reminder, we thought we might leverage our eagle analogy to help you keep present volatility in perspective. 

Note: We shared our analogy back when the market was riding the best month its seen in years! I.e., this was absolutely inevitable, despite the eagle's exceptionally good health...

As we expressed in this week's video, the eagle's vitals are showing virtually no signs of stress. Therefore, we are left for the time being to assume that what we're witnessing is a healthy bird facing some headwinds -- the likes of which it hasn't experienced in quite some time -- and, therefore, is descending to lower elevations where it'll glide around until the winds subside (in the original analogy we said "to a few thousand feet [read Dow points] below", and we weren't kidding when we said "a few thousand").

Every now and then the eagle will ascend a bit (the off and on rallies we've seen this week) to check the winds: If they remain heavy, it'll simply move right back down (today's descent, for example) to whatever lower level it finds comfortable, then glide around a while longer before checking higher altitudes once again. 

When the overhead gusts finally subside, we -- based on our present analysis of the eagle's health -- suspect that it will find its way once again to sustainably higher altitudes. Although we expect going forward that we'll see more frequent adjustments than we have of late, as the eagle experiences more normal weather patterns (last year was abnormally calm). 

Simply put, based on virtually all indications, as we report here today this appears to be volatility to ignore. And, by the way, it has nothing to do with the level of volatility, it has everything to do with the overall condition of the eagle.

In closing, we want to make very clear that we are anything but your bleary-eyed pollyanna advisers. We'll have no problem whatsoever singing a bearish tune when conditions call for it (and I assure you, we will experience bearish/recessionary conditions at some point in the future), it's just that, at the moment, they clearly don't. 

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