Aggressive upside on the anticipated S&P move above a ‘declining-tops’ pattern, assisted by strength in the FANG stocks (and GM) as pension-fund re-balancing started to kick in; the seasonal flows are evident in some stocks; and some buybacks resuming since ‘blackout’ periods end, as we get through the majority of earnings reporting season.  

Now it’s all not so glorious as many presume. While the month finished on a favorable note; part of this is the ‘automatic rally’ aspect of both a washout in a wild Monday; an expected ‘inside-day’ Tuesday consolidation; and while quickly dismissed, certain other issues that ultimate weigh on equity prices.  

Among those are the lower guidance many have as they look deeper into a forthcoming 2019. The market to a degree already discounted 2019 with the preceding expected decline (all year in many stocks; the last two months for the FANG issues which are rebounding). A lot comes to a head next year; of course the tax-cut benefits are recognized as discounted by the market; but it’s tricky because one does not know how ‘politics’ will impinge on that area.

If the economy remains strong (more growth envisioned); that’s also going to point towards ‘higher rates’ and that’s another form of pressure. While for sure lower rates (if things turn more sour) do not ensure ‘all clear’ for stocks either; since at these overall higher Index levels, you need profitability too.  

It’s not just a bifurcated market; it’s an impossible one to accurately divine in the intermediate term, because of the ‘known unknowns’. What we’ve done (and I think that’s about all one can do at this point) is properly guide along the way of the ‘rolling correction’ or ‘rolling bear’ ‘Rinse & Repeat’ saga that’s prevailed for so many months; and then the ‘crash alert’ for FANG and S&P in late September and October 2-3; actually at the Dow and S&P high (that’s not the point, because we forewarned how bifurcated this all had been).