Stocks ended the week, the month, and the quarter higher! The bulls remain in clear control of the market. The great mini-rotation, a term I coined a few years ago, remains alive and well!
The great mini-rotation refers to a bullish event that happens when big money rotates from one out-performing sector to another under-performing sector without the market moving lower. We saw this take place in the second half of the third quarter. Big money rotated out of high beta-growth stocks and into under-performing areas of the market. Meanwhile, the S&P 500 and the Dow Jones Industrial Average continue trading near/at record highs.
At this point, the market remains very strong and the fourth quarter tends to be a seasonally strong period for the market.
A Closer Look at What Happened Last Week…
Mon-Wed Action:
Stocks fell on Monday after North Korea said the U.S. declared war by flying military planes over the weekend. The White House responded and said the U.S. did not declare war and that claim was “absurd.”
Separately, the Nasdaq fell hard in the morning – led lower by the several high-profile tech stocks. Shares of Facebook, Tesla, Amazon, Apple, Netflix and Google all fell hard on heavy turnover but the Nasdaq and several of these stocks turned around in the middle of the day as buyers showed up and bought the latest “dip”.
Stocks bounced on Tuesday after Janet Yellen was dovish again and basically said easy money is here to stay (for now). Fed Chair Janet Yellen gave a speech on Tuesday and said the Fed may have made a mistake assessing the health of the labor market and misjudged the rate of inflation. Dr. Yellen also made the case for a gradual pace of adjustments in the face of “significant uncertainties.” Yellen also said, the Fed should be “wary of moving too gradually.”
Stocks edged higher on Wednesday after the GOP announced it’s plan to slash taxes.
Thur & Fri Action:
Stocks rallied on Thursday after GDP came in at 3.1%, matching estimates. The small-cap Russell 2000 hit a fresh record high, leading the other indices.
Stocks were quiet on Friday on the last trading day of the third quarter as several of the popular indices hit fresh record highs.
Market Outlook: Bulls Are Back In Control
The bulls are back in control and the market remains very strong. As always, keep your losses small and never argue with the tape.
