Research By Potomac

More of the Same?

It’s beginning to look a lot like Groundhog Day! I know—it’s not as catchy as the true holiday original, but we deal in facts here… and those are the facts. The...

No Fright in This Tape

As we move into the final week of October—culminating with Halloween on Friday—there’s little to no fright in the market. The short-lived, credit-induced blip f...

Give Credit Its Due

Last week, at the Potomac Remix Conference, I stood on stage and had to be mostly bullish—for the third consecutive year. And while we still believe that equity...

Cracks in the Facade

Over the weekend, I noticed a lot of people suddenly became experts in private credit. This obscure backwater of the financial system has been booming over the ...

Perhaps a Tap on the Brakes

The S&P 500 closed at another record high last week as investors continue to ignore the “thematic” risks that the media loves to highlight. The most recent ...

At the Risk of Sounding Like a Broken Record

As the title of the note suggests, I don’t really have anything new to say about the market. I wish I did—it would be great to “call the top” right here in thes...

Keep it Simple & Straightforward

Sometimes—very rarely, but sometimes—I think it would be fun to be one of the macro pundits. You’ve all read their work: long weekly missives trying to connect ...

Buy the Rumor, Sell the News?

The Federal Reserve is meeting this week. A rate cut is almost a certainty—market-implied odds are around 92% for three cuts by year-end. The only real question...

The Market Is Not the Economy

I feel like I burst a lot of bubbles last week. It was back-to-school week. I teach a college class on market analysis (mostly technical), which is part of the ...

Welcome to the Worst Month of the Year

Summer is unofficially over, and investors return from the holiday weekend to begin what has historically been the worst month of the year. Seasonality is one o...

Healthy Rotation

As we enter the final “official” week of summer and begin to transition from long, hot days into the end-of-year stretch, we can’t help but notice that the stoc...

You Can't Argue with New Highs

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names. In other words, breadth matters — bulls want to see broa...

Markets are Strongest When They are Broad

This week’s title echoes the first half of rule number seven from Bob Farrell’s classic “10 Rules for Investors”: Markets are strongest when they are broad and ...

One Week Does Not Make a Trend

Last Thursday morning, as the market was trading higher on the back of earnings reports from Meta Platforms, Inc. (META) and Microsoft Corp. (MSFT), I looked un...

Maybe a Little Too Quiet

Maybe a Little Too Quiet July 28, 2025 It’s summer. And it seems like nearly everyone in the market is in relaxation mode. “Set it and forget it” passive flows ...

I Spy Another New High

We’ve been bullish—and right—in these pages for many weeks. During that time, we’ve highlighted the various systems that support our composite models, all of wh...

The Trend is Bullish, The Trend is Healthy, The Trend is Confirmed

Whenever I speak to market participants about Potomac, I always emphasize the composite models—and the multiple systems that power them. From there, I will expl...

Data > Feelings. Get Bulled Up!

Dan is in Italy, sitting on a beach, and sipping an Aperol spritzer with his pinky out. I have been asked to come out of retirement and write something other th...

The Buy the Dippers Win Again

If I could play an instrument (I can’t), I’d start a band. I’d call that band Buy the Dippers. I can already hear the DJ—Tom Morello, because I’m not a traitor ...

I Don't Know...

The title of today’s missive is my attempt to get in front of the inevitable questions. What does greater escalation in the Middle East mean for the market? “I ...

Things Are Probably OK!

This week’s title isn’t overly complex or sophisticated—but it’s probably true. We say “probably” because nothing is ever guaranteed in this business. Still, ba...

Stocks Are Not the Problem… Rates Could Be

“Given the U.S. credit rating cut, it’s logical to expect some near-term weakness. However, as long as the index remains above the 60-week moving average, the o...

This is an Important Week

As I sit to write early on a May Monday, stock investors—especially the “buy and holders”—are rejoicing over the prospects of a weekend tariff deal between the ...

Pretty Decisive

If you knew nothing but the appearance of the weekly candles for the major averages, you’d be hard-pressed to be bearish. Yes, I know the U.S. credit rating was...

Shall We Dance

For the second consecutive week, the major averages in the U.S. reversed losses to close near the top of the range. In the case of the S&P 500 and the NASDA...

Signs of Life

After making the cautious/bearish case for multiple weeks in these pages, last week we began to highlight what we would want to see for signs of a bottoming pro...

Here is What to Watch

Our process is rooted in three key pillars. First, identify the trend in the broad market. Second, assess the health of that trend via breadth metrics. Third, l...

The Tide Has Turned

Assuming you know how to swim, if I dropped you a mile into the ocean and said, “swim to shore,” the most conducive environment for reaching land quickly would ...

The Defense is on the Field

As the quarter comes to a close, the market’s defensive squad is on the field. For the past few weeks, we have been highlighting the weakening conditions as it ...

It’s Not Just a Growth Story

Many have argued that recent market weakness is purely a function of the “growth trade” rolling off. Darlings such as Tesla (TSLA) and Nvidia (NVDA) have seen m...

The Shift

We have seen the shift, possibly in more ways than one. The first shift that we care about has to do with who has the benefit of the doubt. For a long time, it ...

Do or Die Time?

After a third week of declines for the S&P 500, we can view this week as do or die for the bullish trend. We continue to view the market as “bent, not broke...

Bent? Yes. Broken? No

In my experience, the biggest disagreements in markets, between bulls and bears, are usually a function of timeframe. A “trader” may have a bearish view of the ...

Some Dents

We have been unabashed bulls in these pages for some time, which is saying a lot for someone who carries the nickname “Doomsday Dan.” However, the simple fact o...

K.I.S.S

The title for today’s note is not a reference to a certain one-hit wonder “glam band” but rather to a concept that we are all well served in remembering from ti...

It’s Not All Tech All the Time

This past weekend was less eventful than the previous three as it relates to “things that investors are worried about,” and as I went through my weekly process ...

We Just Focus on the Data – Tariff Edition

For the third weekend in a row, there was “an event” for investors to think about. First, it was the inauguration, then we were awash in what to make of Deep Se...

We Just Focus on the Data

I know it’s coming, so I am going to get in front of it right now by answering all questions with “I don’t know,” followed by the title of this note. “What does...

Bulls Get What They Need

In our last note, we highlighted the importance of breadth for both bulls and bears in the market. The bulls needed to see an improvement from recent dodgy numb...

A Big Week for Breadth

My weekend reading was full of views on market breadth. Some argue that the recent deterioration is a signal of an immediate correction for the broader averages...

The Bond Market Calls the Fed

Over the holidays, I revisited Michael Lewis's classic Liar’s Poker. For anyone breaking into the financial industry in the 1990s or early 2000s, this was essen...

And With That, the 2024 Season Comes to a Close

As the S&P 500 enters the final two trading days of the year, both bullish and bearish cases can be made. Undoubtedly, many will attempt to predict how 2025...

If Santa Claus Should Fail to Call…

A Santa Claus rally refers to the sustained increases found in the stock market during the last five trading days of December through the first two trading days...

You Have to Look Under the Surface

The S&P 500 took a small rest last week. If all you did was look at the index, there wouldn’t be much, if anything, that appears concerning. However, when a...

Growth

Let’s be honest, writing this weekly note has become a bore over the past few months. The S&P 500 has exhibited a string of weekly record highs. Breadth has...

Dare I Say It?

Risk asset markets in the U.S. are in confirmed uptrends for the most part. There is broad participation. Anyone making the “Mag 7” argument is either lying or ...

The Bulls Are Thankful

As we enter the holiday-shortened week, the bulls truly have much for which they can be thankful. The cyclical rally in the S&P 500 from the October 2022 lo...

Just the Facts

It’s easy to get caught up in the news, especially when it’s as significant as electing a new U.S. president. Right now, everyone is trying to interpret the pot...

Now It’s Time for the Big Show

Well, here it is. After all the hype and anticipation, we are looking directly at Election Day in the United States. While I normally don’t do this, I feel comp...

Turn of the Month Effect

Seasonality is a broad concept that can be analyzed in many ways. One common approach is to examine the average monthly returns of a stock index to identify typ...

We Made It

The title of this week’s note refers to the fact that Thursday marks the end of the “worst six months” of the year for the stock market—the conclusion of the “s...

Getting the Best of It

The title of this week’s note comes from a book by David Sklansky, best known for his work in the field of poker. More precisely, for his work in helping player...

Who Do You Believe?

If you look at the equity market in the United States, it appears that there is no reason for fear. The S&P 500 closed at a record level, completing its fif...

Why Argue? Confirmed Highs Are Bullish

I generally do not view arguing with the market as a productive use of time. To me, it would be like arguing with the ocean. Imagine standing on the beach as th...

Now What?

For the first time in more than four years, the Federal Reserve cut interest rates. This move did not come as much of a surprise to investors, as Fed Fund Futur...

If I Wanted to Make a Bearish Case

While much of our writing has had a bullish tilt, we are open to the idea that there is a bear case to be made. I am not going to go into the usual “seasonality...

The Un-Inversion

The 10-Year – 2-Year Yield Curve has finally un-inverted. We have written and said many times that the inversion is not the warning sign for a recession, but ra...

Well, That's Different

The S&P 500 is knocking on the door of a new high as all return from the holiday weekend. We have written at length about the breadth improvements that have...

Soft Landing Confirmed?

The title of this week’s note is in the form of a question. Not because I am fan of Jeopardy, but because I am willing to admit that I honestly do not know. How...

All Clear?

The speed of movements in the market, and in investor sentiment, is one of the biggest changes that I have seen over my career. It still amazes me how fast mark...

Listening to the Message of the Market

Last week, we discussed the “possible” rationale for recent weakness in the market: the Yen Carry Trade. That prompted questions from some readers about what we...

Strong Sell-Off from Confirmed Highs? Blame Japan

It seems that when Japan sneezes, the rest of the world catches the flu. Such is the case when you rest of the world uses your debt and currency to fund their t...

Isn’t This What Everyone Wanted?

For weeks, months even, we have heard from the stock market bears that the breadth was weak. That there were in a concentration bubble. That there was only a se...

And Just Like That, Breadth Improvement

I would be lying if I said that we were not paying attention to it as well, but the bad breadth bear case just lost a lot of its merit. Last week saw a massive ...

Unconfirmed Highs

In what is likely to be the theme of the summer, the S&P 500 has made another new closing high while fewer stocks took part in the rally. For investors who ...

Something is Not Right

There are two kinds of investors: the passive index huggers and the active managers. The former only cares about what the index, usually the S&P 500, is doi...

Some Warning Signs

In our note on May 28th, we said that we would keep life simple for the summer. We mentioned that we were going to focus on the market’s trend, the health of th...

Bonds, U.S. Bonds

We are on the lookout for a durable bottom in bonds. There I said it. I have not been a bond bull in a long time, and to be clear, I am not one right now. The m...

Zooming Out

I am a self-described market junkie. When I wake up, I check the futures. Before I go to sleep, I check the futures. I just started using a Bloomberg terminal a...

Keeping it Simple for Summer

Sometimes, people fall into the trap of writing about complex topics that are off the beaten path to be different or prove that they are adding nuance to the di...

Time to Kill the Traditional Stock Bond Portfolio?

It takes a long time to change ingrained behavior, but it seems the investors who will be the most rewarded soon will do just that. We have written and spoken a...

Something for Everyone

Stocks rallied for a third consecutive week, but there is much debate about the health of the rally. Bulls will point to market internals (breadth) and argue th...

Chop’t is Not Just for Salads

Chop’t was one of my favorite lunch spots when I worked in New York City. You walked in, picked what you wanted in a salad, and then at the very end, someone be...

Stagflation

Get used to it, and become familiar with it, because the title of today’s note is a word that you are going to hear thrown around a lot. According to Investoped...

Regime Change

The only constant in markets is change. Sometimes the change is short-term in nature, sometimes it takes years to play out. Whatever the case, market regimes ch...

Catalyst?

There has been much talk in the bearish community this year about divergences. Divergence is a term for when one market or indicator does not confirm the streng...

Who Has the Burden of Proof?

One of my favorite exercises when it comes to the market is determining who has the burden of proof. Which side—the bulls or the bears—needs to make the stronge...

Follow Prices, Not Fed Speakers

Last week saw volatility creep back into asset markets as Federal Reserve Governors made comments during their intermeeting speeches that seemed to fly in the f...

You Were Always on My Mind!

I have an eclectic music taste; I can move from 90’s Hip Hop (Biggie and Dre) to Grunge (think Nirvana) to Country (think about the title of today’s note). It c...

But Did You Test It?

As the S&P 500 trades to new all-time highs and the much-hated Russell 2000 trades to new 52-week highs, all anyone wants to talk about this weekend is the ...

The Dash for Trash

The dash for trash is on! One of the more hated pockets of the equity market, and deservedly so, has been Small Capitalization stocks. They have gone nowhere fo...

Barbells are Not Just for the Gym

As the market, as defined by the S&P 500, moves higher on the back of high-profile names such as Nvidia, Corp (NVDA), and a handful of others, it may seem a...

Which Is It?

The S&P 500 closed the week above the much-watched 5,000 level. Here is where I will inject my rant that round numbers in the market are only important beca...

Red Flags

Wall Street was abuzz with the news late Friday; a long-time bearish strategist from a major U.S. bank was no longer in his role on the investment committee. Th...

It’s Entitled to a Rest

The S&P 500 closed 2023 with a nine-week winning streak. It is entitled to take a rest, and that is just what it did during week one of the 2024 season. Thi...

The Bonds That Keep Us Together

It's been a while since we took a look at the bond market in isolation. While five charts on a Monday morning won't cover the entire fixed income landscape, we ...

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