November 4, 2018
Weekly Market Outlook
By Keith Schneider
Now that the bad witch that takes flight occasionally during October has done her thing and scared everyone, what does that bode for the market? Considering last week’s rally, is she back in her lair? Is she not merely dead, but really most sincerely dead?
In advance of this week’s midterm election, the market has given a huge rise in long term rates, movement to safety plays such as Big Cap Value stocks, and defensive sectors (utilities and consumer staples). Our momentum indicators, that measure the velocity of the trend, are eroding. This erosion points to our bad witch taking flight earlier than normal and staying a lot longer.
Did I forget to mention that housing stocks have already been hit very hard and gold has been holding up well?
However, that does not rule out a bounce or even more from current levels. Keeping it real, since 1946, every mid-term election (18 to be exact) has ended with Equites up a lot a year later… every time in fact, 14.5% on average.
A bet against stocks looking out 1 year from now is not exactly a quant’s walk in the park. The market demands pure tape reading more than ever as animal spirits are driving the markets with the country on the emotional edge.
This week’s highlights
Check out this week videos for some specifics.