Good morning,
I hope you had a delightful Thanksgiving holiday — the markets certainly did. Who would have thought that a three-week correction in November could be erased during a holiday-shortened week? At their November lows on 11/20, the S&P 500, Nasdaq, and Russell 2000 were down -4.32%, -6.89%, and -6.95%, respectively. Yet by month-end, they closed +0.25%, -1.45%, and +0.96%. Correction over; month saved.
Even though these numbers are fairly pedestrian, after a long bull run, initial pullbacks always feel worse than they really are.
We enter December with risk sentiment a bit fragile following a sharp plunge in crypto — futures there are down about 6% this morning. S&P futures are off -0.62% as traditional risk assets continue to shadow large crypto swings. Whether crypto is leading or following isn’t entirely clear, but in the absence of other headlines today, it’s the topic du jour.
The modest technical damage done earlier in November has been fully repaired. Crypto volatility aside, the path looks reasonably clear for year-end strength in equities — assuming, of course, the Fed delivers a rate cut next week. That’s not guaranteed, but the odds are tilting that way.
Be well,
Mike