The second month of the fourth quarter kicked off with a bang as the Russell 2000 gained more than 2% on the session. Volume was lighter than Friday’s end of the month volume, but gains were solid. Lagging behind was the Dow Jones Industrial Average, but it was able to get back into the green for the year. Consumer Services was the only S&P industry in the red today. Energy and Healthcare sectors led the S&P 500 as both were up more than 2% on the session. Financials were not too far behind. Lagging were Utility companies as high yielding dividend stocks continue to fall out of favor. All in all today was a pretty good session for stocks. We continue to see positive action from many of our names and continue to execute our strategy with flawless precision.
This market continues to creep towards overbought conditions. Many will look to pick a top and expect another move like we saw in August. Given where we are and how far we have come it would not be out of the ordinary to see a pullback between 1-3%. The NASDAQ 100 is up more than 600 points from this recent run. A small pullback cannot be ruled out. The key will be how you react to the pullback. If you are scared and trade scared it will likely lead you to be shaken out of solid positions. Using a sound strategy anchored by more than 100+ years of market history we can avoid the amateur mistake. Learn from our experience and time tested strategy.
This week we will see another Jobs report and one that will be highly scrutinized. The most important Jobs report ever! More economic data will flood this market throughout the week. Our focus will be the price action the market exhibits rather than guessing how the market will react to any given report. For example the ISM Manufacturing index for the US came in at 50.1. That is barely above stagnant. Fortunately for us the stock market doesn’t always trade how the underlying economy is actually doing.
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While we may be a bit in overbought territory the market is setting up for a Santa Claus rally. We doubt the Federal Reserve will want to rain on Christmas night by raising rates. Stick with the trend and control risk. It is the name of the game.
