07-08-2021 - No... this is NOT it!
As usual, our day starts about 3 hours before the market opens. No, we aren't taking calls at that time, but we are intently looking at the market, our holdings and the stops; especially when the Dow looks to open down more than 500 points.
My trade team and I exchange a few thoughts, ideas and observations via our online group discussion platform. We review the trends of the market and various sectors and get comfortable with where the market is... and where it is not.
Then, about 15 minutes after the opening bell, we get together again to discuss how the market is opening. It is at this time that I ask the team for their thoughts on our portfolios.
But... before we move into an analysis of our holdings and how they are, individually, holding up (or not so much) in the market, I poll each member of the team with the following question:
"Based on your analysis of the market, I want to know if you assess the market to be bullish, bearish or in transition?"
Each member has to commit to one of those three choices. I don't want long-winded explanations. I want one-word answers: Bullish, Bearish or Transition.
If we are not in 100% agreement, we talk it out until we reach consensus. This morning, there was 100% agreement without the need to debate the conclusion.
The 100% conclusion of the team (5 people) was the market, despite the sell-off that is underway, is bullish.
Why is this important? It has everything to do with how aggressive we are with regard to stops. Normally, if this were earlier in the week, we would also be looking at how we backfill positions that we sell out of, but with this being a Thursday, we do not (generally) want to be buying this late in the week with a weekend in front of us.
I know some of my readers woke up this morning and saw the totally unexpected sell-off in the market and asked this question: "Is this the beginning of the much anticipated major correction followed by a massive move lower?"
I'm sure 'some' of my blog readers (not you, certainly) were beginning to panic and began selling everything at the open.
While there may be many pundits out there (you know... those sky-is-falling newsletter writers) that were saying, "See??? I told you this was going to happen!" Let me let you in on a tiny little secret... I don't care who the author is of any newsletter or regardless of how famous (infamous) the source is... no one knows what the market is going to do in the next hour, much less the next week or the next year or the next decade. They are all... 100% of them... just guessing... and most of those guesses are "wags".
I don't know what the market is going to do in the future, but I am dead certain that I know exactly what the market "is doing" at the moment. Why do I know that? Because I (and you can too) can measure where the market is, and that is all that matters. If I can keep my clients on the right side of the market, then I have successfully managed their capital.
This morning, we did not panic. The market has NOT moved down enough to be in a bear trend... not yet anyway. Have we stopped out of few positions? Sure, but no big deal. Most stopped out with a profit and that's always the plan.
At this writing, the market has recovered nicely off of its low. Tomorrow is another day, to coin a phrase, and we will assess how best to deal with that market when it gets here... and not before.
So... for this moment in time... the sell-off today is NOT it. The sell-off today is just a tiny whipsaw. If that whipsaw turns into something different tomorrow, we will react accordingly.
Don't be afraid to believe in letting the market tell you where it is... and quit listening to all those guessers out there who scare you into thinking that they know what's going to happen in the market and when.