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Weekly Economic and Stock Market Commentary – November 6, 2023


Note: The US Treasury Bond market will be closed Friday, November 10th, in honor of the Veteran’s Day Holiday.

As for the stock market specifically:

Boom!!! The bulls stamped through markets worldwide last week, perhaps putting bears into winter hibernation. Markets had the largest weekly gains in more than a year last week in what seemed to be someone flipping a switch.

November starts what traditionally is the strong period for market performance, and it did not disappoint last week. The rally was spread out across many sectors and company sizes. Also, what happened last week more-or-less wiped out the losses of October.

We are in silly season for mutual fund capital gains distributions. I will elaborate on that phenomenon at another time.

We also have “our friends in Washington” going through their own silly season – although that seems to be perpetual. I will go into greater detail next week, but one party has been clamoring for a Christmas tree bill for many things, while the other party wants a specific bill to deal with one problem.

Now that the single problem bill won, that side is willing to put together a bill that combines money for a few problems, and the side that originally complained about “not doing everything altogether” is mad that the other is “trying to tie together too many items”

I don’t make this stuff up.

The NYSE and Optionable Bullish Percent Indicators went on offense from below the 30% (30-yard line) last week. The OTC remains on defense, so we have a split recommendation of WEALTH ACCUMULATION for NYSE stocks, and WEALTH PRESERVATION for Nasdaq stocks. On a smaller sample size, the BP for S&P 500 also flipped back to X’s. Since I’d quoted the Over-bought/Over-sold indicator recently, you may recall that the “market” was 52% oversold last week. The rubber-band that is this indicator has now snapped back to a more normal state of being just 6% oversold. Meaning the easy pickings, while not for the feint of heart, have been picked.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of November 3, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor announced the economy added 150,000 jobs in October. Also, the unemployment rate rose to 3.9%. The financial news immediately became fixated on what the Federal Reserve will do at its next meeting in December. The report noted there was a downward revision of more than 100,000 jobs that were reported as gained in August and September. The sector that saw the most job growth during October was the government.

The Federal Reserve met and did nothing to short-term interest rates. They meet again in December.

Please contact me if you want more information or have any questions.