1. Moving the markets

It was another wild ride in the markets with the Dow spending the session in the red yet closing just about unchanged. The S&P 500 and Nasdaq never dropped below their respective unchanged lines and continued their record run with the latter showing more bullish momentum than the former.

The S&P produced its sixth straight win in a row, because of traders having come to terms with the Fed’s taper program, which was taken as a sign of a growing economy that should be able to handle an unwinding of the pandemic stimulus. There was also some relief that this long anticipated move by the Fed had finally become reality and did not produce a surprise.  

Regarding data, we learned that US jobless claims totaled 269k for the week, which was not only better than the expected 275k but also amounted to the lowest pandemic-era total. On deck tomorrow is the much-anticipated jobs report with consensus estimates calling for 450k new jobs added.

The most shorted stocks did what they are supposed to do, namely head south, which was accomplished today. SmallCaps pumped and dumped but managed to close unchanged. Bond yields gave back most of yesterday’s advances with the 30-year slipping back below the 2% level.

The US Dollar, after tanking yesterday, found some footing and rallied back, in the process gaining 0.49%. Gold seemed to disregard the dollar’s strength and benefited from lower bond yields by rebounding a solid 1.67%, but it was not quite enough to conquer its $1,800 level.

Despite the wild ride, bullish momentum was maintained, which could see even more upside, unless tomorrow’s jobs report turns out to be bad news.

As I mentioned yesterday, I will be out of town tomorrow, so my next market commentary will be posted this coming Monday.

1. Moving the markets

The eagerly awaited Fed announcement came and went and contained no surprises. As anticipated, the pandemic bond buying program of $120 billion/month is scheduled to be reduced by $15 billion starting 11/21 presumably due to the economy being strong enough to handle it.

The Fed then gave the bulls the ultimate assist by reiterating that it was in no rush to raise interest rates after finishing the tapering process by the middle of next year. The kicker came with these words:

Inflation is elevated, largely reflecting factors that are expected to be transitory.

Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors.

There you have it. The inflation scenario is still considered to be transitory, a statement that I believe will be proven dead wrong at some point in the future. However, at this moment in time, the markets were pleased and continued their ramp-a-thon into the close.

MarketWatch summed it up this way:

The Dow Jones Industrial Average rose 104 points, after being down more than 160 points earlier in the session and closed at a new record. The S&P 500 traded up 0.65% to a new all-time high. The Nasdaq Composite added 1% and closed at a record. This is the fourth session in a row that all three major averages closed at new highs.

The Russell 2000 rose 1.8% and notched a record close. The small-cap benchmark is up 4.7% this week.

While equities reacted positively, helped by the continued short squeeze, the US Dollar took a dive after a mid-session run up, bond yields spiked with the 30-year piercing the 2% level. Gold rode the roller coaster but ended the session lower despite a last hour rebound attempt.

The fear and greed index shot up a couple of notches from yesterday’s reading.  

I will be posting the week-ending commentary tomorrow, Thursday, since I will be out of town on Friday.

1. Moving the markets

Anxiety about the upcoming Federal Reserve decision tomorrow seems to have evaporated, because equities continued their pursuit of all-time highs with the S&P 500 finishing at a record high for the third straight session, while the other two indexes set new intra-day highs.

Strong earnings provided the confidence that the year-end rally will be on deck, no matter what the Fed’s verdict on rates will be tomorrow, thereby ignoring concerns like supply chain issues, Covid risk and a slowing economy. It is doubtful that whatever announcement will be made that it will contain unexpected surprises designed to upset the bullish meme.

Statisticians at BofA pointed out that the S&P 500 has averaged gains of 1.1% in November and 2.3% in December since 1986. The final month of the year is in the green 79% of the time.

Assisting today’s ramp-a-thon was the continuation of the short squeeze which, since the beginning of August, seems to be a showing a recurring pattern in terms of amplitude.   

The US Dollar gained a tad but remained in a tight 3-day trading range, but gold again failed to climb over the $1,800 level and slipped 0.36% for the session.

With the markets’ relentless climb, we have now entered the “extreme greed phase,” such as demonstrated in this chart. As ZeroHedge pointed out, we have now reached the “greediest” level since December 2020.

Hmm…

1. Moving the markets

Despite an early pump, which was quickly followed by a dump, the major indexes successfully battled the unchanged line, which turned out to be a springboard for a bounce into the close. In that process, the Dow and S&P 500 set new all-time highs, thereby maintaining the bullish theme into the first day of November.

The overall gains were modest, but SmallCaps ended up having their best day since the end of August with a solid advance of 2.6%. However, the assist came from a sudden short squeeze, which helped the levitation. Tesla showed another mind-numbing gain of 8.5%, after having the crossed the $1 trillion market cap last week.

While corporate earnings season dominated the picture last month via solid profits, more announcements are on the agenda this week and might lend further assistance to the bulls. Other market affecting events will be the outcome of a 2-day Fed meeting ending this Wednesday and the all-important October jobs report, which is due on Friday. Expectations are for an increase of 450k jobs.

Bond yields edged higher, while the US Dollar went nowhere. Neither one of those moves proved to be a detriment for Gold, which steadily moved higher and closed the session with a 0.61% advance, but it stopped just short of the magic $1,800 level.

It was a good start to a new month after the stellar October performance.