Will The Stock Market Rally Extend To October 2012?
Stocks have made a comeback in the last few hours after treading water and drifting downward last week to end the quarter. It was still a good month and quarter for the stock market (see basic stats here). October 2012 could be a continuation of the September rally if technology, small caps and financials move higher and sector rotation is over in the short run.
Apple stayed above recent support levels and the IWM exchange traded fund didn’t fall significantly last week as traders took profits to end the quarter. We saw some rotation into cyclicals last week and bonds are finding a bid which we don’t think will last long as investors look to close out the year saying they were holding stocks the whole time.
Equities retreated to pre-QE3 levels and may be bouncing back if market participants believe they won’t get another chance to buy them at these levels. We thought the dip last week was a buying opportunity and if the quarter begins with traders moving prices back to QE3 announcement levels, the market could rally even higher this month.