I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Sunday Planning, I plan for the week ahead.
I’m cursing myself for some of the trades I placed over the last two weeks, making decisions counter to my own guidelines, and enacting a kind of revenge trading. I’m nervous that tomorrow is going to continue Friday’s sharp declines in tech stocks.
Tomorrow is October 19th, which recalls Black Monday, that day in 1987 on which there was a global stock market crash. The S&P 500 fell more than 20% that day, after having already fallen 9% the week before.
One of the major amplifiers of the crash was portfolio insurance, computer-driven strategies intended to limit losses used by institutions. These programs caused a feedback loop where prices fell, portfolio-insurance strategies called for more selling, which led to even more selling.
U.S. stock markets now have circuit breakers that pause trading in certain circumstances. These are based on S&P 500 declines:
- 7% decline – trading pauses for 15 minutes
- 13% decline – trading pauses for another 15 minutes
- 20% – trading stops for the rest of the day
The first two limits apply only before 3:25 pm Eastern, and halt trading across U.S. stock markets, not just S&P 500 stocks. The 20% shutdown applies anytime during the regular trading session.
These, of course, don’t stop losses from continuing after the pause or day’s halt is lifted. But they allow markets to absorb information and order. No floor is established under prices.
On Twitter, some pundits have been asking if we’re going to see another Black Monday tomorrow.
Even if we do, with the “buy the dip” mentality of current investors as well as the current presidential administration’s wish to keep stock market investors happy into the midterms, it seems like any such crash would be short-lived.
But I may be just fooling myself, looking for arguments for why we’re not going to see a whole lot more stock market weakness.
Overall liquidity in the economy is down, with the first rate hike and expectations of more tightening conditions, a coming end to tariff refund checks, and drag from delayed OBBB spending cuts that begin in 2027.
If the administration does want to do something to boost stock market prices, they are rapidly running out of options.
I’ll just have to wait and see what happens, tomorrow, and in the weeks and months after.
Other activities this week
This week, I’m working on improving my systems and practices for trading so as to avoid impulsive moves like I made over the past two weeks that left me in overly risky positions. I want to encode certain screening rules for trades, and build those rules into my trading app.
Beyond that, and aside from lunch with a friend on Thursday and taking my mom to the airport on Friday, my time is all my own, so I’ll be doing the usual: dog walking, lap swimming, trading, writing, home cleaning, and garden maintenance. I had my sprinklers blown out last week, and already brought my geraniums inside for the winter. I might need to do some hand watering of the garden beds and the lawn depending on this week’s weather, and it’s time to mow the lawn again.
Tonight is “Sunday Scaries,” in which my daughter and I alternately choose a horror movie, and eat pizza while we watch. It’s my turn to choose, so I’m perusing options from this Reddit thread, asking for “underrated or lesser-known horror films.”
Some options – The Mist, Audition, Bring Her Back, Antichrist, Speak No Evil. Antichrist is part of Lars Von Trier’s Depression Trilogy. I’ve seen the second in the trilogy Melancholia, so it might be interesting to watch that. But I didn’t love that movie, so I’m leaning more towards The Mist or Audition.
Have a great week!