The S&P found strong technical support after entering correction territory, suggesting that the current rally still has legs and could continue into year-end.
While much may depend on the developing situation in Israel and the Fed’s posturing around the future path of interest rates, for now our Momentum Dial remains in a Positive position.
Our first look at US GDP in the third quarter showed 4.9% annualized growth, its strongest quarter since 2021. Consumers have been undeterred by higher rates as spending remains robust, although survey data suggests that future uncertainty may curtail these high rates of spending.
As of now, our Economic Dial remains Negative.
It is no coincidence that the recent three-month selloff in equities has coincided with 10-year treasury yields jumping from 4% to 5%, as higher long-term rates make stocks appear more expensive.
While US corporate earnings have stabilized, valuations remain stretched, which leaves our Valuation Dial in a Negative position.
Our composite Three Dials reading remains in a Moderately Defensive position, with two dials Negative and one dial Positive.
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