The S&P 500 and NASDAQ 100 hit fresh all-time highs Friday after a tame CPI report showed inflation cooling more than expected — giving the Fed an all-clear cut rates next Wednesday. Markets love lower rates, and small caps followed suit, with the Russell 2000 also reaching new highs. November is historically a strong month for small caps, so I’m actively looking for new opportunities in that space.
This has been the strongest earnings season in four years, fueled by massive capital expenditures in the AI sector. Data center order backlogs accelerated in the third quarter, and analysts expect continued strength and price gains into the fourth quarter.
A mean reversion algorithm triggered a sharp pullback early in the week, hitting the top 10% of Russell 3000 performers since August 1st — some fell over 5% intraday on Tuesday before rebounding by Friday. These shakeouts are healthy in a bull market, as they flush out weaker hands and set the stage for renewed advances. I used the opportunity to sell stocks with broken charts and add to positions that continue to show leadership.
Gold also experienced volatility, dropping roughly 5% on Tuesday before reversing higher as central bank buying resumed. Since the U.S. seized Russian assets following the Ukraine invasion, many central banks have reduced Treasury holdings and increased gold reserves as a store-of-value hedge. This trend is likely to continue as U.S. debt and deficits expand. Historically, excessive money printing has been the downfall of great nations — a cautionary reminder for our time.
We remain nearly fully invested in all three models and plan to deploy additional capital as new opportunities arise. REITs have also caught my attention, as several are breaking out of constructive bases on strong volume. I remain bullish as the market trades within its upper and lower trend channels.
Do to others as you would have them do to you. Luke 6:31