Welcome to my video presentation for Monday, November 1. In my video, I analyze the latest economic, financial and political developments that affect your portfolio. The article below is a condensed summary of my presentation.

Even though October is historically a bad month for stocks, the final trading day of October 2021, which was last Friday, closed with gains for the week and for the month.

For investors, the days leading up to Halloween were more treat than trick. Gains for the entire month of October were as follows: the Dow Jones Industrial Average +5.8%, the S&P 500 +6.9%, and the tech-heavy NASDAQ +7.2%.

Signs that President Biden’s infrastructure plan would pass after all, combined with solid third-quarter corporate operating results so far from the S&P 500, helped drive the major indices higher for the full week of October 25-29 (see table).

October represented a rebound from September, when the major indices fell for the month. Stocks fell across the board in September, with the S&P 500 shedding 4.8%. However, instead of presaging a continued decline and full-blown correction in Q4, as many pessimists had feared, it’s turning out that September’s pullback was “the pause that refreshes.”

In pre-market futures contracts Monday, the major U.S. indices were trading sharply higher. The rally in most overseas indices continues as well.

Despite quarterly earnings misses last week from Big Tech stocks such as Apple (NSDQ: AAPL) and Amazon (NSDQ: AMZN), the tech sector is generally thriving as demand for tech products and services accelerates. What’s more, Apple’s and Amazon’s stumbles are likely transitory and due to supply chain bottlenecks that are on their way to getting resolved.

We also saw a decline in volatility last month. The CBOE Volatility Index (VIX) index, aka the “fear index,” fell to about 17, roughly in-line with readings before the outbreak of the coronavirus pandemic, further supporting bullish sentiment in the markets (see chart).

The New York Stock Exchange Advance/Decline Line (NYAD) has broken out of its trading range to hit new highs, another sign of improving market breadth. The rally is broadening to include smaller stocks outside of the mega-cap “FAANG + M” coterie. We’re also witnessing the ascendancy of both growth and value stocks.

Watch This Video: Interview with Market Guru Joe Duarte

Political dysfunction is abating on Capitol Hill (at least for the time being) and the White House is actually on the verge of getting fiscal stimulus passed, albeit at a trimmed-down $1.75 trillion. It seems that compromise isn’t dead in Washington, especially when the issue at hand is lots of new pork for the constituents back home. Decisive votes are due in Congress this week.

Wall Street favors “Build Back Better” and calculates that investments in infrastructure confer long-term benefits to the financial community. For upper bracket investors, the icing on the cake is that big tax increases on the wealthy and corporations probably aren’t in the cards and different revenue-generating schemes will likely get implemented to pay for the administration’s proposed spending package.

Santa Claus rally ahead?

The rate of COVID infections is declining; the economy is rapidly reopening; consumers are spending; corporate profits are soaring. The bull case remains intact.

The Federal Reserve is about to begin tapering its asset purchases, probably sometime this month, but don’t forget that interest rates are still scraping historic lows. The Fed’s policy rate won’t get boosted anytime soon.

Low rates, rising home prices, and fatter 401k plans are likely to loosen purse strings for the extremely important holiday shopping season. Retail spending already has shown signs of strength.

Fourth quarters historically are favorable for the stock market. With consumers sitting on a huge hoard of household savings, we’ll see what Santa has in his bag for investors over the final stretch of 2021.

Editor’s Note: I’ve continually made it clear in my columns that technological innovation is a key pillar of this bull market. Tech companies that thrived during the pandemic will do even better in the post-COVID world.

Our investment team has unearthed a tech play that’s poised to take off, but it’s flying underneath Wall Street’s radar. To learn the details about this rare money-making opportunity, click here now.

John Persinos is the editorial director of Investing Daily. Subscribe to his video channel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John Persinos is the editorial director of Investing Daily. Subscribe to his video channel.