“They call him the streak!”
My wife and I saw Ray Stevens sing “The Streak” in concert years ago. The premise of the hilarious song is that a man keeps streaking the town, and everyone is in an uproar.
Right now, the markets are doing some fun streaks, too, but we aren’t in an uproar; we are egging them on.
Stocks continue to inch higher this week on the news that the Federal Reserve has finished raising interest rates. Lower treasury yields have also helped stocks bounce back strongly as it tries to recover losses from its three-month correction.
Stocks in the S&P 500 have risen eight consecutive days and nearly 7% since the October lows as of Nov. 8. According to Dow Jones Market Data, if it ends Nov. 9 positive, it would be the first nine-day winning streak in 19 years.
The Nasdaq stock index (technology stocks), not to be outdone, was up for a ninth straight day as of Nov. 8. The technology index closed above its October high on Nov. 7, the first time a major stock index has reached a higher high (double peak) since July, showing positive momentum, according to Dow Jones Market Data.
The negative news is that the Russell 2000 index (small-caps stocks) is still near its low for the year, showing that the market run isn’t extending beyond the largest companies and the big tech companies. This weakness suggests that cautious investors currently prefer high-quality, profitable stocks over small companies with more potential to grow.
Even though small caps continue to struggle, it looks like the rest of the stock market is gearing up for a fresh run at reaching new all-time highs. Here is what we need to see for it to be a possibility.
- The S&P 500 needs to move above its October high (around 4,420).
- The Russell 2000 needs to return to the 1,800-point level to show broader market strength.
- The U.S. dollar also needs to weaken so U.S. companies can be competitive in selling overseas. The U.S. Dollar Index needs to stay below 106; it hovered at 105.5 on Nov. 9.
The markets seem confident that the Fed has finished its rate-hiking cycle. If rates continue to pause and the dollar continues to soften along with the normal end-of-the-year seasonal market strength, it might provide a more enjoyable market experience closing out the year.
“The Streak” was released in February 1974 during the then-popular craze of streaking. It was such a craze that nearly 40 other songs about streaking came out during that period.
In Stevens’ song, a reporter is interviewing a man who tried to warn his wife with “Don’t look, Ethel,” but is always too late. In the end, Ethel gets in on the fun and streaks, too.
I hope, like Ethel, the rest of the stock market gets in on the streaking fun.
Have a blessed week.
Fervent Wealth Management is a financial management and services entity in Springfield, Mo. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
Opinions are for general information only and not intended as specific advice or recommendations. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and can’t be invested in directly.
The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Visit www.ferventwm.com for more information.
The economic forecast outlined in this material may not develop as predicted & there can be no guarantee that strategies promoted will be successful.
Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.