11/9 Risk-Off Market
3/3 Alarm Criteria
The Mantra Ends
For months the mantra has been “bullish until proven guilty”— and last week Thursday the risk-off alarm triggered with a simultaneous breakdown of the S&P 500 trend, market breadth and momentum. With the Friday session closing below the short term trend, this confirmed the shift to risk-off environment in the near term. This marks the second confirmed risk-off alarm for the year, the first one occurring on February 21 where the S&P 500 declined an additional 19% of the next month and a half before marking a bottom.
That was a severe outcome, and it is exactly the type of decline I am optimistic the risk-off analysis system will continue to help avoid. Will that happen again? I’m not sure— the only known at this stage is that risk-off environment becomes primary and the likelihood of a continued decline is greater than that of a rally back towards all time highs.
In the early stages of the alarm there is no analysis that I consider or use to speculate the severity of a decline. The initial stage for me is simple— reposition the portfolio defensively, monitor near term level for validation of bearish character.
Final Housekeeping Note
Subscription rates will be increasing on November 10 for new subscribers (tomorrow). This change will not impact any existing subscribers who as always will retain their original subscription rate so long as the subscription remains active. Subscriptions created before November 10 will retain the current rates.
Monthly will adjust to $40/month (up from $28)
Annual will adjust to $400/year (up from $320)
The first note of the month will remain accessible to all, the remaining Sunday notes, and all mid-week Lines After Dark will be reserved for supporting subscribers.