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 the talking on this fine Monday morning.

Briefly, the bottom line is the indicator boards continue to suggest that this is not a low risk environment and that while staying on the bull train remains warranted, this is no time to for complacency. Specifically, I continue to be concerned about growing technical divergences and the state of some of the indicators, especially those on the External Factors board. However, since one of the trade wars looks to be resolved this morning, the bulls remain in control of the game. Here's hoping that the divergences on the charts are can resolve themselves to the upside and that the bull train can keep rolling down the tracks.

The State of the Big-Picture Market Models

I like to start each week with a review of the state of my favorite big-picture market models, which are designed to help me determine which team is in control of the primary cycle.


View My Favorite Market Models Online

The Bottom Line:

  • The Primary Cycle board was little changed last week. In order to guage the overall "tone" of the board, we have decided to begin reporting the mean and median reading of the models each week. This week's mean percentage score of my 5 favorite models slipped a bit to 58% while the median is 65%. These readings suggest to me that the underlying strength of the overall market is not terribly robust.

The State of the Trend

Once I've reviewed the big picture, I then turn to the "state of the trend." These indicators are designed to give us a feel for the overall health of the current short- and intermediate-term trend models.


View Trend Indicator Board Online

The Bottom Line:

  • The Trend Board remains in good shape overall. However, there are some divergences to be found amongst the major indices. When combined with the divergences between the U.S. and global markets, this is something to watch closely here. The bottom line is that meaningful declines are often preceded by technical divergences.

The State of Internal Momentum

Next up are the momentum indicators, which are designed to tell us whether there is any "oomph" behind the current trend.


View Momentum Indicator Board Online

The Bottom Line:

  • The Momentum board downticked again last week as both breadth and the "thrust" indicators slipped noticeably. With more sell signals than buys and the historical average return currently negative, investors need to stay alert here. In short, the odds of a decline are now heightened.

The State of the "Trade"

We also focus each week on the "early warning" board, which is designed to indicate when traders might start to "go the other way" -- for a trade.


View Early Warning Indicator Board Online

The Bottom Line:

  • The "Early Warning" board continues to suggest that some caution is warranted here as the odds lean bearish from a near-term perspective.

The State of the Macro Picture

Now let's move on to the market's "environmental factors" - the indicators designed to tell us the state of the big-picture market drivers including monetary conditions, the economy, inflation, and valuations.


View Environment Indicator Board Online

The Bottom Line:

  • The External Factors board continues to give me pause from a big-picture perspective. Simply put, there isn't enough green on the board to be outright bullish.

Thought For The Day:

Let yourself be silently drawn by the strange pull of what you really love. It will not lead you astray. -Rumi

The NEW Daily Decision Portfolio

The latest upgrade to the Daily Decision service went live on Monday, July 9. The new, state-of-the-art portfolio employs a modern, hedge fund style approach incorporating multiple methodologies, multiple strategies, and multiple time-frames. The portfolio is comprised of three parts:

  • 50% Aggressive Risk-Managed Growth (up to 300% long)
  • 20% Market Leaders
  • 30% Top Gun Stocks

The Aggressive Risk-Managed Growth portion is made up of five trading strategies and accounts for 50% of the portfolio. The Market Leadership portion makes up 20% of the portfolio. And the Top Guns Stocks portion (10 of our favorite stocks) will make up the final 30% of the portfolio.

All three of our strategies are run in a single Marketfy model - the model is currently labeled as the LEADERS model. The goal is to make the service simpler to follow by putting everything in one place.

Today's Portfolio Review:

2018 YTD Performance Update:
Daily Decision Portfolio: +10.2%
S&P 500: +9.0%

Current Rating Explained
This is our rating for the day. The Current Rating tells you what action we would take if we did not currently hold the position. A "Buy" rating means we would be willing to purchase the position at current prices. A "Strong Buy" suggests this would be our first choice to buy. A "Hold" rating indicates we would not make new purchases at current levels. And a "Sell" rating indicates we will likely exit the position in the near-term.

Positions Can Change
Positions often change during the trading session. Remember that we will send a Trade Alert via SMS Text Message and/or Email BEFORE we ever make a move in the models.

Disclosure
At the time of publication, the editors hold long positions in the following securities mentioned: SPY, IJR, QQQ, XLK, XLY, XLV, AAPL, MSFT, AMZN, CNC, TRU, VFC, DECK, SQ, RMD - Note that positions may change at any time.

Wishing You All The Best in Your Investing Endeavors!

The Front Range Trading Team

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NOT INVESTMENT ADVICE. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment.

Posted to Daily Decision Trading Se... on Oct 01, 2018 — 7:10 AM
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