November 2019 - Market Update

November 8, 2019

 

Unlike October of 2018, this past month saw a solid market rise for all the indices we follow in this newsletter.  From a half point increase on the Dow to an over three and a half point gain for the NASDAQ, October was a solid month for stocks.  Howard Capital Research figured the odds for the overall stock market for the remainder of the year and reported that there’s an 82% chance the market will finish higher than it was at the end of October.  Then the Dow Jones Data Group analyzed market returns going back to 1950 and found that when the Dow Jones Industrial Average and the S&P 500 index are up a sizable amount at the end of October, as indeed they were this year, positive returns for the rest of the year are in the cards.  The authors characterized the gains as “remarkably stellar”.  Specifically, when the Dow is up by at least 15% in the year-to-date performance through the end of October, the index has been 15-0 for November and December, tacking on an average additional return of 5.55%.  The worst gain was +0.97%, the best +14.84%, with most being in the +4% to +6% range.  Since the Dow was up 15.9% and the S&P 500 was up 21.2% at the end of this October, the year 2019 is qualified for admission to the party.  Of course nothing is guaranteed, but the odds sure are attractive!  Our models remain fully invested at this time.  However, we’re vigilant to anything that would cause the market to suddenly tank.  Economically, we don’t see anything that would cause a sudden dip in market prices, but domestic politics or a geopolitical situation could very well cause a sudden loss of faith in our economy, which could spell bad news for stocks across the board.  And with computers now doing the vast majority of the trading on the exchanges, it’s not a really big hunk of bad news that has to happen for the market to suddenly reverse course.  We do remain optimistic going into the remainder of the year, even though we will certainly continue to keep our eye on the ball.

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