Here’s my video presentation for today. I provide greater details in the article below.

In a quote from the 1984 comedy This Is Spinal Tap, rock band leader David St. Hubbins (played by Michael McKean) observes: “It’s such a fine line between stupid and clever.” Those words have become a cultural meme.

In investing, the line is even finer between bullishness and delusion. At what point does an optimist become a Pollyanna?

You should always be wary of “confirmation bias.” It’s the tendency to interpret new evidence as confirmation of one’s existing beliefs or theories.

Many analysts argue that the current rally has momentum and we stand on the cusp of a secular bull market. I mostly agree, although we’re likely to experience dips along the way depending on pandemic news.

To be sure, this bullishness seems counterintuitive, considering the precarious state of the economy and the exponentially spreading coronavirus. But I think the objective evidence gives credence to optimism.

Robust retail sales, the likelihood of fresh fiscal stimulus, vaccine progress, loose monetary policy, pent-up consumer demand, technological innovation, and the denouement to election-year chaos are paving the way for sustained upward momentum in equities. Let’s do the numbers.

The Dow hits 30K…

The three main U.S. stock market indices all finished last week in positive territory, with the S&P 500 and tech-laden NASDAQ both hitting fresh record highs several times. The Dow surpassed the psychologically significant threshold of 30,000 (see the chart).

Investors focused on brightening prospects for future economic growth and shrugged off the mixed data on jobs.

The U.S. Department of Labor (DOL) reported Thursday that initial jobless claims for the week ended November 28 came in at 712,000 versus 775,000 expected.

However, the DOL reported Friday that nonfarm payrolls increased by only 245,000 last month, far below the consensus estimate of 440,000 (see chart).

The November gain marked a sharp slowdown from the 610,000 jobs added in October. The national unemployment rate last month fell to 6.7% from 6.9%, meeting expectations. It’s worth noting, though, that the headline unemployment rate fell because of a drop in workforce participation.

Sometimes on Wall Street, bad news is good news. Investors interpreted Friday’s downbeat jobs report as positive, because it increases the likelihood that Congress will act on stimulus.

Read This Story: Get Ready for the “Do Something” Congress

The month of November also marked an expansion in market breadth. For most of 2020, the stock market rally has been disproportionately driven by large-cap technology stocks, raising concerns that a decline in a handful of Big Tech market leaders could drag down the rest of the S&P 500. But those fears are dissipating, as other sectors and asset classes join the party.

Small caps, in particular, have been surging. The small fry tend to do well when investors are betting on stronger economic growth.

November witnessed 464 stocks in the S&P 500 that ended in positive territory for the month. That’s the second highest for the year, behind April’s recovery of 478 stocks (see chart).

A sign of a market peak is when fewer and fewer stocks are participating in the upswing, but we’re seeing the opposite dynamic at work. After a relatively slow September and October, this broad-based rally should continue into December and beyond, as optimism over the economy outweighs worries about the virus.

Read This Story: Should You Believe in a Santa Rally?

While the main U.S. stock market indices have been hitting new record highs, longer-duration bond yields have been rising from record lows, together with inflation expectations, on expectations of new stimulus.

Talks in Washington on another coronavirus relief package have resumed, increasing hopes that stimulus will get passed by the end of the year. But until the pandemic is finally conquered, we won’t experience full-throttle economic growth.

COVID-19 remains a cloud over the economy and markets. However, investors already are looking ahead to an economic renaissance in 2021, when vaccines have stemmed the outbreak and a semblance of normalcy returns to public policymaking.

A reliable tailwind for markets is sustained monetary easing by the Federal Reserve. Fed officials last week indicated that the dovish policy of the U.S. central bank should continue into the foreseeable future.

Commodities on the upswing…

A major beneficiary of robust global growth next year should be commodities, especially copper. The versatile properties of the “red metal” make it ubiquitous in manufacturing processes and finished products.

The modern industrial world can’t function without copper, but supply of the metal has fallen due to production cutbacks.

Global mining giant BHP Group (NYSE: BHP) reported last week that copper production needs to double over the next 30 years to meet demand driven by global trends towards renewable energies, decarbonization, and electrification. The combination of growing demand and insufficient supply is likely to push copper prices through the roof.

The prices of copper and other vital commodities are staging a remarkable rally that should continue into 2021, as economic recovery and construction projects fuel the need for raw materials. Prices for copper already have risen to their highest level in almost eight years.

After months of painstaking research, our investment team has found a small, under-the-radar copper play that’s poised to generate market-crushing gains. Learn more by clicking here.

John Persinos is the editorial director of Investing Daily. You can reach him at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.