October One Of The Best On Record

It’s hard to know why markets rallied as powerfully as they did this month.

Some felt it oversold—and it was to a point. Others noted the Fed didn’t raise interest rates this month when they had the chance—so it’s party on from that perspective.

And, to help bulls make the case “the bad news is good” mantra continued to keep rising interest rates on hold.

It doesn’t matter that monetary policies remain in “emergency” conditions for 7 years even after the recession ended over 5 years ago. So if economic growth is “solid” according to Bernanke and Yellen these days you have to wonder, why have they kept rates this low?

Well, I said it yesterday and will stay with this tune, “the Fed is a pawn of Wall Street and we’re just shills in the game”.

Economic data continued to be weak. Aside from a burst in the Chicago PMI, Personal Income & Spending only came in at 0.1% for both measures from 0.4% previously; Employment Cost Index rose to 0.6% vs prior 0.2% which is negative meaning costs are heating up; and Consumer Sentiment fell to 90 vs prior 92.1, meaning lower energy prices will only last for so long.

Crude Oil prices rose sharply Friday as they did Thursday due to a large drop in the “rig count” featured below:

Stocks fell sharply into the close as some large investors hit the sell button banking some October profits. That said, the month featured nearly a 9% return.

Market sectors moving higher included: Energy (XLE), Retail (XRT), South Korea (EWY), Russia (RSX), Mexico (EWW), Crude Oil (USO) and Bonds (TLT).

Market sectors moving lower included: Just about everything else.

The top ETF daily market movers by percentage change in volume whether rising or falling is available daily.

Volume was heavy but breadth per the WSJ was mixed.

October’s rally was real and technicians must follow the tape’s judgment in that regard. But for those following the fundamentals, the rally has been a farce.