Another Buying Opportunity
Igor Manukhov - Nov 01, 2024
This market weakness is an opportunity to buy, not a reason to sell.
October has been a great month for stocks up until the very last day when it all fell apart and all October gains were erased. Is this the end of the bull market? I don't think so.
In my opinion, the market had to take a breather as it was getting ridiculously good and euphoric. We are near the end of a very close election where candidates propose quite different directions for the country. This uncertainty could create some volatility. On the other hand, we are entering the historically strongest seasonal period from November through to February, when markets tend to rally. Moreover, markets tend to rally after a president is elected (no matter who is elected). Historically, the market does not seem to care who it dances with, so to speak; it just wants to know the music. Finally, high-yield spreads are still quite low, which means that the bond market is calm. Usually, the bond market starts to panic before stock market.
As per the chart below, the price is approaching an important support level of 5600 (blue line) and the RSI indicator is approaching an oversold reading of 30. At the very least, this suggests a potential rebound soon. Considering that our research team believes that the S&P500 will end 2024 at around 6100-6200 and we are currently sitting near 5700, I would use any market weakness to put funds to work.
