Week-In-Review: Stocks Start Fourth Quarter With A Bang!

Strong Start To Q4

The S&P has closed at a record high six straight days which is its longest run of the millennium (since 1997)! Stocks rallied sharply last week as the bulls remain in clear control of this market. At this point, the market is now extended (in the short term) and remains very strong. It is important to keep in mind that the fourth quarter tends to be a seasonally strong period for the market and that means we can easily head much higher over the next few months. In the short term, I would be remiss not to note that the market is extended to the upside and due to pullback. Underneath the surface, the action remains picture perfect as the great mini-rotation remains alive and well. Until we see any formidable selling, the bulls deserve the benefit of the doubt. Remember, in strong bull markets (present market included), weakness should be bought, not sold.

Mon-Wed Action:

Stocks rallied on Monday which marked the first trading day of the fourth quarter. Financials and health care stocks led the market higher which bodes well for the broader averages. The world woke up to the horrific news out of Las Vegas. The mass shooting sent several big casino stocks lower on Monday as they will have to rethink security in large public places. Separately, economic data was light, the ISM manufacturing index rose to 60.8 in September which was the highest read since May 2004. Stocks rallied on Tuesday as buying continued apace. The CME Group’s FedWatch tool expects the Federal Reserve to raise rates one more time this year which is largely expected to happen in December. The Fed already raised rates twice this year and said several times they plan to raise rates 3 times. Stocks rallied again on Wednesday helping the benchmark S&P 500 to have its longest winning streak since May. Economic data was mixed, ADP and Moody’s said private employers added 135,000 new jobs in September, beating the Street’s estimate for 125,000. Separately, the ISM non-manufacturing index, hit 59.8 in September and easily beat the Street’s estimate for 55.5.

Thur & Fri Action:

Stocks rallied on Thursday helping the S&P 500 to enjoy its first 8-day winning streak since 2013. The big news on Thursday came from D.C., the House passed a $4.1 trillion budget which is the first major step toward tax reform. Last week, the GOP said they want to lower corporate taxes to 20% from 35%. If that bill passes that will be a big boost the U.S. (and global) economy. Stocks were quiet on Friday as the market paused to digest a very strong rally. Separately, the Labor Department said U.S. employers shed 33k jobs in September as the country suffered from two major hurricanes.

Market Outlook: Bulls Are Back In Control

The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape. Get Our Free e-Book: Learn How To Buy Leading Stocks…EARLY. Get It Here…

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