From the desk of Vance Howard:
The HCM-BuyLine® is positive and has built back a lot of strength after the selloff in late September/early October. The S&P 500 is hitting resistance and probably needs a few trading sessions to break on through. The markets are a bit overbought and will probably trade sideways for a few days. It’s nice to have October just about over with, because October has historically been a volatile month. I remember Black Monday, October 15th, 1987, when the market dropped over 20% that day.
SPX, DJIA, and NDX recorded their third straight positive week, with SPX and DJIA successfully finishing at new all-time weekly high closes. Furthermore, the NASDAQ is less than 2% from all-time highs. Healthcare and consumer discretionary are snapping back sharply this week, and six sectors are recording gains of more than 2% over the rolling five-day stretch. Transportation is now higher by 12% in the first three weeks of October, helping to recoup much of its weakness from May. Most sub-sectors tied to supply shortages, i.e., trucking, shipping, and logistics are outperforming sharply in the near-term. Sentiment has gotten more bullish as a result of the last three weeks of rally.
Existing home sales rebounded 7.0% in September, the most in a year, to a 6.29 million unit annual rate, the highest level since January and above the consensus of a 6.10 million unit rate. It was led by a 7.7% jump in single-family sales, while condo/co-ops picked up a smaller 1.4%. All four regions posted gains for the month. The NAHB attributed the rise to homebuyers rushing to secure a purchase before a potential increase in mortgage rates. Beyond that, a continued economic recovery, gains in employment and compensation, and accumulated savings from fiscal stimulus during the pandemic continue to provide cyclical strength to housing demand.
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