October Closes Out On A Sour Note

Not a great month for stocks as the election looms along with earnings and the Fed. Early morning futures showed we would see gains at the open. However, sellers were ready to spoil a rally to close out the month of October. Volume fell across the board and while it is not strange for volume to be light on a Monday it is odd volume is light on the last day of the month. Normally, we see a huge spike in volume heading into the final trading day of the month. Given how we have performed over the month it is no real surprise we ended the month on such a weak note. Now we move onto November and we will see if we get a year-end rally. Much will depend on how earnings round out as well as the Fed. However, the pinnacle of headlines will be a week from Tuesday when the next US president will be elected. We’ll stick with our market model and execute as we normally do.

On a trend following note this market has gone sideways for nearly two months. The Dow has been consolidating above 18,000 a solid “whole” number. What is the catalyst to push this market higher? Plenty of news headlines over the next week to do just that. Of course, these headlines can push the market much lower. Anything goes in this market and we will continue to follow the market. There is no need to take unnecessary risks.

Tomorrow is the first day of a two-day meeting of the Federal Reserve Open Market Committee. On Wednesday, we’ll get their latest statement on monetary policy. Friday, we will get another read on how many jobs the economy created. Last months was certainly disappointing. We have yet to see a blow-out jobs report where more than 500,000 jobs were created. It is probably wishful thinking to get a huge number. What matters is how the market reacts to the number. Price is what is most important stick with it.

Not a great way to start the week, but we have cleared October a notoriously bad month for the market.