MARKETS ENTHUSIASTICALLY SHAKING OFF OCTOBER VOLATILITY – BRING ON NOVEMBER!

October 26, 2021

The HCM-BuyLine® is positive and has built back a lot of strength after the selloff in late September/early October. The S&P 500 is hitting resistance and probably needs a few trading sessions to break on through. The markets are a bit overbought and will probably trade sideways for a few days. It’s nice to have October just about over with, because October has historically been a volatile month. I remember Black Monday, October 15th, 1987, when the market dropped over 20% that day. 

SPY

SPX, DJIA, and NDX recorded their third straight positive week, with SPX and DJIA successfully finishing at new all-time weekly high closes. Furthermore, the NASDAQ is less than 2% from all-time highs. Healthcare and consumer discretionary are snapping back sharply this week, and six sectors are recording gains of more than 2% over the rolling five-day stretch.  Transportation is now higher by 12% in the first three weeks of October, helping to recoup much of its weakness from May. Most sub-sectors tied to supply shortages, i.e., trucking, shipping, and logistics are outperforming sharply in the near-term. Sentiment has gotten more bullish as a result of the last three weeks of rally. 

Existing home sales rebounded 7.0% in September, the most in a year, to a 6.29 million unit annual rate, the highest level since January and above the consensus of a 6.10 million unit rate. It was led by a 7.7% jump in single-family sales, while condo/co-ops picked up a smaller 1.4%. All four regions posted gains for the month. The NAHB attributed the rise to homebuyers rushing to secure a purchase before a potential increase in mortgage rates. Beyond that, a continued economic recovery, gains in employment and compensation, and accumulated savings from fiscal stimulus during the pandemic continue to provide cyclical strength to housing demand. 


Wealth Watch

Sign up for our weekly news to hear from CEO and portfolio manager, Vance Howard.