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S&P 500 Weekly Update: The 'Melt Up' Continues As The Dow 30 Joins The 'New High' Party

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by: Fear & Greed Trader
Fear & Greed Trader
Investment advisor, portfolio strategy, dividend growth investing, long/short equity
Summary

Investors hear warnings of a meltdown coming over trade and politics, while some see a melt up "alert" being triggered.

The stock markets across the globe have sniffed out the fact that Global economic data may be carving out a bottom.

With the yield curve the steepest since January, interest rates are reacting to the slowly improving global economic news.

“Personal finance is only 20% head knowledge. It’s 80% behavior!”Dave Ramsey

The month of October can be known for turnarounds and turbulent times. While this October wasn’t particularly volatile, the stock market did produce a reversal. As market participants were looking ahead into October, not many concluded we would see new highs. The trade skirmish was still a major worry, and then we saw ISM Manufacturing fall to its lowest level since 2009. Of course once any investor sees or hears "2009", they invariably have nightmares.

Earnings season was also coming up on the horizon, and practically nobody was expecting anything even remotely positive. Many felt corporate America was not about to relate a positive story about the just completed third quarter or its outlook for the rest of the year. All of that negative sentiment was in place and market participants found themselves playing the "cautious" card as the stock market broke out of its trading range to post new highs.

As stocks have rallied, the VIX has moved in the opposite direction, and while it didn’t make new lows when the S&P made new highs, it plumbed the low end of its range from the last year. If you are a trader that wants to play a VIX spike in an attempt to time a correction, be my guest. However, if you are a Bull with more than a 6 month time horizon, you want to see the VIX drop to lows and stay buried there for weeks on end.

The commentary heard every time the VIX is at lows goes something like this;

“The VIX is too low, something is wrong, investors are way too complacent, the stock market is ready to fall”

Guess what, during the move to new highs, the VIX went to lows and stayed there. If you look back at what has occurred in the past, the VIX was in a coma all during the 19+% stock market rally in 2017. The same thing occurred during long periods of time in the last secular Bull market. Sorry, the VIX is not telling us the market is complacent, it’s telling us the market is strong and going higher.

As with any rally to new highs we have to keep in mind that October's gains coupled with the strong start to November left the S&P 500 and some key groups starting the week at slightly overbought levels. That didn’t matter all that much as the trading week picked up where it left off, on a positive note.

The rally was broad based as money rotated to the unloved sectors (Financials, Industrials, Energy up 3+% on the day, etc.), and new highs outpacing new lows by a 10-1 ratio. The defensive sectors are starting to roll over as "Utilities" sold off to the tune of 3.6% this week.

Despite the knee jerk reaction to "headlines" and “rumors” of what is taking place during trade negotiations, the Bulls remained in charge as the S&P, Dow 30, Nasdaq Composite, and the NYSE, all made new highs this week. The beleaguered Dow Transports posted a new 52 week high during the rally.

Another Dow Theory BUY signal (one of many in this Secular Bull market) was generated this week when the DOW Industrials and Transports both made new highs. While we should expect pullbacks along the way, anyone that wishes to dismiss this headline may be making a big mistake.

The S&P stands with a 23% gain for the year, yet the consensus view is still in place, “The stock market has too many issues”.

Entering this week It was easy to conclude some give back was not out of the question, and would be considered quite normal. Similar to the S&P 500 and some key leading global groups, the MSCI World and the MSCI World Ex –U.S. indices, along with most foreign markets in Europe and Asia are also at short-term overbought levels as well. The calls for a correction in September and October were incorrect. With the markets at all time highs we can expect the “pullback” rhetoric to be ramped up now.

Economy

Year after year, one by one, the pessimistic theories on the U.S. economy have been proven wrong. Eventually the country will fall back into a recession, but I for one won't be listening to the gurus that would have had me hiding under the bed for the last 7 years. I‘ll take the simple approach that has been proven correct, it’s Goldilocks until proven otherwise.

Final IHS Markit US Services Business Activity Index registered 50.6 in October, dropping slightly from 50.9 in September and revised downward from the flash figure of 51.0. The rate of increase in business activity was only marginal overall and the slowest since the current expansion began in February 2016.

Chris Williamson, Chief Business Economist at IHS Markit;

“Although October saw signs of manufacturing pulling out of its recent soft patch, the far-larger service sector remained in the doldrums as inflows of new work failed to grow for the first time since 2009. Taken together, the manufacturing and service sector surveys consequently suggest that the US economy got off to a disappointing start in the fourth quarter, consistent with GDP growing at an annualized rate of less than 1.5%."

“With inflows of new work drying up, firms are relying on previously-placed orders to sustain current output growth, meaning the rate of expansion could weaken further in coming months if demand doesn’t revive. Hence we’re seeing jobs being cut at an increased rate among surveyed companies, with employment falling for a second successive month and to a degree not seen since 2009. Such a weakening of the survey’s employment index will likely feed through to the official jobs numbers as we move toward the end of the year."

“The news was by no means all negative, however, with firms becoming more optimistic about the year ahead, buoyed by hopes of an easing of trade tensions and stimulus from lower interest rates. However, the overall degree of optimism remains sharply lower than this time last year as companies remain concerned by ongoing uncertainty about the outlook.”

September ISM-Non Manufacturing Index bounced to a firm 54.7 from a 3-year low of 52.6 in September leaving the index between the robust 56.4 seen in August and the lower 53.7 from July. The ISM-adjusted ISM-NMI also rose, to 53.9 from a 3-year low of 52.7 in September, versus a higher 56.1 in August but a lower 53.0 in July. This week’s bounce reflected gains for new orders, employment, and deliveries, but declines elsewhere.

The Michigan sentiment report revealed a November uptick to a 4 month high of 95.7 from 95.5 in October. The expectations measure improved, the current conditions measure fell, and the inflation gauges were steady for the 1-year, but slightly higher for the 5-10 year view. Today's Michigan sentiment rise follows gains for most confidence measures in October despite the UAW-GM strike, and analysts expect an upward tilt in the November readings with the strike settlement and encouraging trade news, though gyrations in the "soft data" measures have been difficult to anticipate in 2019.

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The negative rhetoric on “wages” that is prevalent these days doesn't fit the data.

Year over year changes in wages for a number of industries hit new highs, notably both construction and manufacturing.

JOLTS report showed job openings dropped 277k to 7,024k in September after rising 127k in August to a revised 7,305k. The JOLTS rate fell to 4.4% from 4.6%. Hiring was up 50k to 5,934k following the -94k decline to 5,884k, with the rate steady at 3.9%.

The -0.3% U.S. Q3 productivity contraction rate undershot estimates thanks to a big 2.4% rise in hours-worked that beat the 1.0% pace in the monthly jobs data, alongside the expected firm 2.1% output gain as signaled in last week's GDP report. The compensation figures revealed a solid 3.3% Q3 increase that outpaced the Q3 income data from GDP, leaving a hefty 3.6% Q3 unit labor cost rise.

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Global Economy

The J.P.Morgan Global Manufacturing PMI, a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM, posted 49.8 in October, remaining below the neutral mark of 50.0. That said, a third successive rise in the PMI provided a further sign that the downturn may have bottomed out in July.

The J.P.Morgan Global Composite Output Index, which is produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM, posted 50.8 in October, its lowest reading since February 2016 and consistent with only a mild increase in economic output. The level of the headline index has moved lower in each of the past three months.

Olya Borichevska, from Global Economic Research at J.P.Morgan;

“The October PMI's signal a further slowdown in the rate of global economic growth, as weaker services activity offsets signs of modest improvement in the manufacturing sector. Perhaps the most worrisome result in today’s report is the continued sharp decline in the employment PMI. One downside of cooling labor markets is the potential hit to consumer spending growth. The outlook therefore remains cautious, with manufacturers and service providers alike hoping that ongoing factors weighing down on growth and demand, such as subdued confidence and global trade tensions, abate further during the coming months.”

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Eurozone Retail sales beat estimates in September, suggesting real consumption will be up around 1% in Q3.

The IHS Markit Eurozone Manufacturing PMI recorded 45.9 in October. Although up from September’s 45.7 and the earlier flash reading, the index remained well below the 50.0 no-change mark to indicate a rate of contraction that was the second-sharpest in the past seven years.

Chris Williamson, Chief Business Economist at IHS Markit;

“Eurozone manufacturing remained stuck in its steepest decline for seven years in October, meaning the goods producing sector is on course to act as a severe drag on GDP again in the fourth quarter. The survey data are consistent with industrial production falling at a quarterly rate in excess of 1%."

“Geopolitical concerns, ranging from Brexit to US trade policy, continue to create uncertainty, further dampening demand both at home and in export markets."

“The focus of manufacturers remains on cost cutting, reducing inventories and investment spending while also lowering payroll numbers at an increased rate. The steeper pace of job losses is especially worrying, as it magnifies the risk of the downturn spilling over into the household sector."

The IHS Markit Eurozone PMI Composite Output Index improved during October, but remained close to the crucial 50.0 no change mark. The index recorded 50.6, up from 50.1 in September and slightly better than the earlier flash reading of 50.2, but still signalling a rate of growth that was amongst the weakest seen in the past six and a half years.

Chris Williamson, Chief Business Economist at IHS Markit;

“The euro area remained close to stagnation in October, with falling order books suggesting that risks are currently tilted towards contraction in the fourth quarter. While the October PMI is consistent with quarterly GDP rising by 0.1%, the forward looking data points to a possible decline in economic output in the fourth quarter.”

“Worryingly, what little growth was seen in October was supported by firms eating into previously placed work, meaning demand needs to revive to boost new business inflows and prevent more firms coming under further pressure to cut activity and jobs.”

“As for the immediate outlook, much depends on geopolitical issues such as US tariff developments and Brexit, though we will also be watching Christine Lagarde’s first policy meeting on 12th December to assess the appetite for further stimulus from the ECB. Time is needed for recent policy changes to take effect, though if the data flow continues to disappoint more action is on the cards for early next year.”

Germany Factory Orders were up 1.3% month over month, better than expected.

The Caixin China Composite PMI data (which covers both manufacturing and services) showed a further modest increase in overall business activity during October. At 52.0, the Composite Output Index edged up from 51.9 in September, to post its best reading since April.

Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group;

“The Caixin China General Services Business Activity Index dipped to 51.1 in October from 51.3 in the previous month, marking the slowest expansion in eight months amid subdued market conditions.

1) Demand across the services sector grew at a reduced pace, with the gauge for new business falling to the lowest level since February. The measure for new export business picked up slightly.

2) While the job market expanded at a weaker clip, with the employment gauge falling from the previous month’s recent high, the measure for outstanding business rose further into expansionary territory. This implied a mismatch between labor supply and demand.

3) Both gauges for input costs and prices charged by service providers edged down, but they remained in positive territory, reflecting relatively high pressure on costs, including those of workers, raw materials and fuel.

4) The measure for business expectations dropped to the lowest point in 15 months, indicating depressed business confidence.

“The Caixin China Composite Output Index inched up to 52 in October from 51.9 in the month before, amid an improvement in manufacturing, but a softer service sector performance. The employment gauge dipped into contraction territory, indicating renewed pressure on the labor market, which was likely due mainly to structural unemployment. The measure for backlogs of work climbed to the highest level since early 2011, highlighting bottlenecks in production capacity and inventories due to weak business confidence.”

“China’s economy continued to recover in general in October, thanks chiefly to the performance of the manufacturing sector. Domestic and foreign demand both improved. However, business confidence remained weak, constraining the release of production capacity. Structural unemployment and rising raw material costs remained issues. The foundation for economic growth to stabilize still needs to be consolidated.”

A report that didn't garner much attention, Chinese trade data reported on Friday was stronger than estimated, as every metric came in higher than forecast.

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The seasonally adjusted Japan Business Activity Index fell to 49.7 in October, from 52.8 in September, to signal the first decline in services output for over three years. According to anecdotal evidence, there were widespread reports of business activity being impacted by the typhoon and consumption tax increase. That said, the contraction was marginal overall.

Joe Hayes, Economist at IHS Markit;

"Japan's service sector has started the fourth quarter on a weaker footing, as many had expected would be the case with the sales tax hike coming into effect in October. However, the extent of the impact has been obscured by the devastating typhoon, which panelists mentioned had caused notable disruption to business operations.”

"That said, there are reasons to be positive as new orders continued to rise, despite the poor weather exacerbating negative effects from the sales tax hike. This contrasts with April 2014, the last time the sales tax increased, when new orders dipped into contraction territory. This would hint that the impact this time round has not been as detrimental on the Japanese economy.”

"That said, the short-term pricing and demand adjustments to the taxation change will likely dampen activity in the closing months of 2019. Unfortunately, it seems that the service sector may struggle to offset manufacturing weakness."

Registering 49.2 in October, the IHS Markit India Services Business Activity Index signaled a second consecutive decline in output. However, rising from 48.7 in September, the headline figure was indicative of a marginal and slower rate of reduction. Anecdotal evidence highlighted subdued demand conditions, competitive pressures and a fragile economic situation.

Pollyanna de Lima, Principal Economist at IHS Markit;

"It's somewhat worrying to see the Indian service sector stuck in contraction, as firms react to muted demand by lowering business activity. Perhaps even more concerning was the downward revision to future expectations, given the possible detrimental impact of subdued business confidence on investment and jobs. The latter already displayed its joint-weakest expansion in over two years."

"In attempts to boost sales, service providers absorbed most of the rise in their cost burdens, lifting their fees only slightly despite intensified cost pressures. Still, this wasn't sufficient to generate new work and we might see selling prices being discounted in the coming months as competitive pressures build up."

"Some areas of the service economy performed better than others. While growth was sustained in Transport & Storage, Information & Communication and Consumer Services, softer rates of expansion were evident in all three cases. At the same time, solid declines in output and new work were recorded at Finance & Insurance and Real Estate & Business Services companies."

The ASEAN headline PMI fell from 49.1 in September to 48.5 in October, signalling a deterioration in operating conditions across the ASEAN manufacturing sector for the fifth consecutive month, albeit of a moderate pace.

Registering 50.4 in October, the seasonally adjusted IHS Markit Mexico Manufacturing PMI was in expansion territory for the first time since April. The headline figure rose from 49.1 in September to its highest mark since February, but was indicative of only a marginal strengthening in the health of the sector.

Pollyanna De Lima, Principal Economist at IHS Markit;

"Challenging economic conditions, subdued business confidence and weak demand resulted in another contraction in Mexican manufacturing production at the start of the final quarter of 2019. In addition to anemic domestic sales, export orders were unchanged from September."

"The stuttering performance of the manufacturing industry seen throughout the second half of the year helped to curb inflationary pressures, with October PMI data highlighting the weakest rate of input cost inflation since the survey started in April 2011. This enabled goods producers to leave their fees unchanged, which may help boost sales in the near term whilst enabling the central bank to continue its easing cycle."

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A UK general election will take place on December 12. Preferences over Brexit are likely to influence voters, making any prediction of the election’s result more complex What has been notable from recent polling, is that a Boris Johnson led government appears more popular, and the recent performance of the UK pound - which is set for its best monthly performance against the dollar in nearly eighteen months - is centered on building hopes that Boris Johnson is able to win a parliamentary majority that helps him pass the Brexit deal he negotiated with the EU before the next extension deadline expires.

Earnings Observations

Data from Refinitiv

Aggregate Estimates and Revisions;

  • Third quarter earnings are expected to decrease 0.5% from Q3 ’18. Excluding the energy sector, the earnings growth estimate is 2.1%.

  • Of the 446 companies in the S&P 500 that have reported earnings to date for Q3, 74.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 74%.

  • Q3 revenue is expected to increase 3.9% from Q3 '18. Excluding the energy sector, the growth estimate is 5.3%.

  • 58.0% of companies have reported Q3 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 59%.

  • The forward four-quarter (Q4 '19 –Q3 '20) P/E ratio for the S&P 500 is 17.8.

Market participants that "excluded" energy during the 2015-2016 time frame realized that there was no earnings recession back then. The remainder of Corporate America continued to grow at a reasonable rate, just as it is today.

More than 1,100 companies have reported their Q3 earnings results so far this season, and as shown below, the bottom-line earnings per share beat rate still has a 7 handle at 70%. Last week’s reading was 73%, so we did see a slight downtick.

Source: Bespoke

However, a reading of 70% this late into the season is very strong and suggests that the final beat rate will likely at a minimum finish in the mid 60's. While last quarter’s EPS beat rate was the lowest reading seen in more than a decade, companies have completely reversed the script to the upside this season.

The revenue beat rate this season is a much more muted 58%, so companies are having a much more difficult time with top line numbers than they are with the bottom line.

Source: Bespoke

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The Political Scene

Not a day goes by where there isn’t some discussion of tariffs. Given all the attention on this topic, one would think that the entire global economy hinges on the latest tariff news of the day. The data released by the Treasury Department helps to put the impact of tariffs into some perspective.

Bespoke Investment Group;

"Even after the surge we have seen since the trade war began, though, tariffs still only account for 0.35% of GDP and less than 3% of total imports. While the current trade policies of the U.S. may be negatively impacting the economy, the magnitude isn’t nearly as strong as the headlines would suggest."

I have maintained from the outset, this isn’t the “horror’ story that is being told on a daily basis for 19 months now. What this narrative has done is allow the mindset of many to become obsessed with a perceived negative that is being exaggerated. This in turn affects how investors view the entire issue. It often leaves out a more "common sense" approach.

When it was announced the meeting between President Trump and Chinese leader Xi Jinping to discuss a trade deal would not occur until December, the typical rhetoric that has plagued this situation followed;

“The longer it stretches out, the greater the risk it blows up,”

Investors have a choice, comprehend the facts that surround this issue, or latch on to the rhetoric that has been commonplace for close to two years. Then compare all of that to where the S&P closed on Friday.

It was mentioned last week that the House impeachment inquiry would more than likely begin to ramp up as the year comes to a close. To that end, it was announced the first public hearings on the matter will be held next week. Investors can now expect a bevy of headlines from both sides, that at this point in time will matter very little to the market.

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The Fed

The 10 year Treasury has rallied 30 basis points since the Fed cut interest rates last week.

The 3-month/10-year Treasury curve inverted on May 23rd, and other than a brief one day change, that curve remained inverted until October 10th. The recession mob had to wait for quite some time, but the 2/10 Treasury Yield Curve inverted on August 27th. That inversion lasted for three days.

For some, that means the countdown clock has started for a recession and "the" cycle peak in the S&P 500. That crowd may be disappointed. None of these yield curves are inverted today.

Source: U.S. Dept. Of The Treasury

The 2-10 spread started the year at 16 basis points; it stands at 26 basis points today.

Sentiment

No surprise that I'm in the minority when it comes to forecasting a recession in the near term. The majority of Charles Schwab Advisers which is a good proxy for the entire industry, are worried about a recession.

Fresh all time highs in the major indices have finally boosted investor confidence as per AAII data. Rising to 40.3% from 33.9% last week, the percentage of bullish investors rose to the highest level since early May when it was 43.13%. The past four weeks have seen bullish sentiment surge by just under 20 percentage points off of the low of 20.31% in early October.

The last time that optimism has risen as rapidly in a four week span was from December of 2017 to January of 2018 when it rose 22.9 percentage points. At that time, sentiment reached much more extreme levels, topping out at 59.75%.

Bullish sentiment has also moved back above its historical average of 38.08% for the first time since August 1st. For most of this year, bullish sentiment has remained fairly subdued. With only a couple of months left in the year, only 9 weeks in 2019 have seen bullish sentiment readings above the historical average. In the history of the survey, only 2016, 1988, and 1987 saw fewer weeks with above average bullish readings.

My takeaway, a sign that the markets may be close to a short term top.

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Crude Oil

The weekly inventory report showed U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.9 million barrels from the previous week. At 446.8 million barrels, U.S. crude oil inventories are about 3% above the five year average for this time of year.

Total motor gasoline inventories decreased by 2.8 million barrels last week and are about 1% below the five year average for this time of year.

For the fifth straight week, domestic companies continue to produce at a record pace of 12.6 million barrels per day. With domestic production so strong, imports were once again at a five year low, as they have been for the past several weeks

With global stock market signaling a global recession may not be in the cards, the selling pressure on crude oil was lifted. WTI closed the trading session on Friday at $57.41, up $1.28 for the week.

The Technical Picture

The DAILY chart of the S&P clearly shows the original break out and a quick retest of the old high as support, followed by a short quick burst to more new highs.

Chart courtesy of FreeStockCharts.com

When indices make new highs, the short term forecast is challenging because we lose the benefit of having the past to help us predict the future, meaning we have lost the ability to have a previous resistance line to target. So the best we can do is try to project. That may mean the increments and distances anyone can measure going forward on a short term technical basis will be smaller, and less robust.

It is also obvious that the index has separated from the very short term moving average (green line), and as in past instances that could be a sign a pause is in the cards.

No need to guess what may occur; instead it will be important to concentrate on the short-term pivots that are meaningful. However, the Long Term view, the view 30,000 feet, is the only way to make successful decisions. These details are available in my daily updates to subscribers.

Short term views are presented to give market participants a feel for the current situation. It should be noted that strategic investment decisions should NOT be based on any short term view. These views contain a lot of noise, and will lead an investor into whipsaw action that tends to detract from overall performance.

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Individual Stocks and Sectors

The political based attacks on large technology companies hasn't dented enthusiasm for the shares of Alphabet (GOOG). The stock has quietly rallied to a new all time high this week. It remains a CORE holding for me.

Semiconductors are one of the key groups we watch as a leading indicator of the broader market, and they continue to hold up well. The group has broken to the upside and is also overbought, but as with Financials, not to the same degree as the general market.

The strong performance of this group isn't a “hope” trade, and can be summed up in a word, EARNINGS. So far this earnings season, more than 80% of semiconductor companies have exceeded EPS forecasts while more than three quarters have topped revenue estimates. Both of these readings are well ahead of the same metrics for the broader market.

Bespoke Investment Group;

“More importantly stock price reactions to earnings have been just as impressive. The average one day reaction of stocks in the Philadelphia semiconductor index reporting earnings has been a gain of 3.26%, and companies are up an average of 5.59% since they reported EPS.”

Ned Davis Research;

"The percentage of S&P stocks with dividend yields above the 10 year Treasury yield is 62%, the third highest on record. And the median P/Es of the top quartile of dividend payers relative to the lowest quintile is near January 2002 lows, making high yielding dividend payers their cheapest in 18 years. Overall, dividend stocks are as cheap as they were in 2016 on an asset class basis, but unlike 2016, they also are cheap relative to other stocks.

It is satisfying to watch the pieces of the puzzle that have been discussed here for months fall into place. The S&P set a new record high, led by the cyclical risk on sectors and was matched by some pretty good market internals. Not even the 90th anniversary of the October 29, 1929 market crash was able to spoil the advance. The media continues to pound their recession narrative into the minds of market participants. Hardly a day goes by where its not mentioned, so it’s no wonder why the sentiment levels are at 20 year lows with the majority believing things were ready to unravel.

I find it hard to find much wrong with the recent upside swing, rest assured that isn’t the consensus view. My view is bolstered by the pessimism that remains all around us. What is really boils down to is the same pattern that emerges from time to time. Market participants become convinced any, or all of the issues they face will turn out badly. What we are witnessing now are extremes, and when that occurs not only are negatives embellished, any positive is swept under the rug.

This year has been unique. If one has been bullish it has been fun to watch. Despite the major indices being up 22+%, the doubters were ever present this ENTIRE year, and positioned themselves for a recession that never came. Interest rates are now reacting to the slowly improving global news with the yield curve the steepest since January. A few months ago the talk was all about the inverted yield curve. Situations often change, and many times they can change for the better.

It seems from the outset participants were divided into two camps. The first believed the biggest negative for the economy was "trade tariffs". The second contingent thought the biggest positive for the economy was “trade tariffs”.

Of course one would then ask how can that be? It is apparent that only one group could be correct. Savvy investors understand how stock markets work. They looked at the data and factored in the probability for a change, a change to the positive. Not every situation has to turn out badly. Anyone that looked at the facts and realized that there was a distinct possibility this issue was NEVER going to take the economy down positioned themselves correctly.

As time went by that outlook was bolstered by the action in the stock market. When the major indices remained resilient and made new highs in April, June, July, October, and now November of this year, it told them they were on the right track.

The group that viewed the trade issues as the biggest negative believed in the narrative and were fooled. They never bothered to look at how small the overall impact was going to be, and dismissed the message from the stock market itself, as each of those prior market highs were questioned.

Furthermore, the skeptics gave little or no thought to the notion that a positive resolution was even a remote possibility. The consensus view had it all turning out badly.

At the end of the day, as it is with every day of every year, the market sends a message. An investor can chose to follow it, or dismiss it. They can enhance their portfolio or lag behind wondering what went wrong.

All year long this was a very simple analysis. The message has been to concentrate on the positives, simply because the market trend is bullish.

Savvy investors followed the markets message.

I would also like to take a moment and remind all of the readers of an important issue. In these types of forums readers bring a host of situations and variables to the table when visiting these articles. Therefore it is impossible to pinpoint what may be right for each situation. Please keep that in mind when forming your investment strategy.

Thank you #2.jpg to all of the readers that contribute to this forum to make these articles a better experience for everyone.

Best of Luck to All!

Disclosure: I am/we are long EVERY STOCK/ETF IN THE SAVVY PLAYBOOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My portfolios are ALL positioned to take advantage of the bull market with NO hedges in place.

This article contains my views of the equity market, it reflects the strategy and positioning that is comfortable for me. Of course, it is not suited for everyone, as there are far too many variables. Hopefully it sparks ideas, adds some common sense to the intricate investing process, and makes investors feel more calm, putting them in control.

The opinions rendered here, are just that – opinions – and along with positions can change at any time.

As always I encourage readers to use common sense when it comes to managing any ideas that I decide to share with the community. Nowhere is it implied that any stock should be bought and put away until you die. Periodic reviews are mandatory to adjust to changes in the macro backdrop that will take place over time.