Despite a rally at the close, markets sustained a slippery slide to close down last month. This October markets have behaved like they do in a Presidential election year. These mid-terms carry a lot of attention and uncertainty, a combination that stirs stock prices until the uncertainty is gone. We’re hoping that is what was at work here.
Signs signaling the coming end of the business cycle gradually increase. As the business cycle ends, the economy shifts toward recession. For investors, the volatility index moved higher in October and brokerage cash levels are very low, a sign of investor optimism that accompanies the end of a bull market. Of note: the S&P has more tech exposure than any time since 1999. The tax plan of 2017 may prolong this bull market a while. The coming end of this bull market may bring a steeper decline than average, but no repeat of 2008 is expected.
Too hot and then too cold, finally sliding to the even side, October weather competed with the stock market for volatility. Just enough good days helped get the garden cleared of a season’s growth. Many trips to the compost center later, the beds and shrubs look tended again and new garlic is planted. Hungry birds flock the feeders. One good sign: snowbirds have not yet appeared. However it is defined, some Indian summer will cheer us.
