December 24, 2018

Hello reader!

There is no change to the model portfolio.

The decline in the stock market last week was one of the sharpest in the past decade. Broadly diversified indexes behaved like mere individual stocks as they crumbled -8% (Nasdaq) to -14% (S&P Biotechnology Index - XBI) in a matter of 5-days. One would have to go back to the period 2007-2008 to find a similar instance. At that time, the market was staring at an economic dislocation which came to be called The Great Recession. This time it's the fear of a recession in a year or two. What started as some legitimate concerns, acquired its own momentum, snowballing into a recession of confidence. With fear reigning supreme, the market capitulated. 

The stock market environment remains uncertain and the model portfolio will require readjustment most likely at the end of the month. Typically, steep declines are at some point followed by a bounceback, something missing thus far. Perhaps the trigger for a change in sentiment could be even something expected but positive, like a resolution of the government shutdown, that can break the negative news cycle. The upcoming shortened week will provide further insights into the market's appetite to begin consolidating at these levels or not.  

For any questions, kindly contact us at support@GraycellAdvisors.com or use the Contact form.

Sincerely,
Graycell Advisors

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