[Altos Weekly Traders Edge] After October woes, can stocks still end on a high note this year...details inside

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Seasonal strength One reason for their optimism is a well-known historical pattern that shows that stocks tend to perform better in the last quarter of the year than in any other period. “We think that widespread negativity, combined with a still positive technical trend in the US and favorable seasonal patterns soon kicking in, supports our view that the stock bull market is not over yet,” said Chris Konstantinos, chief investment officer at Riverfront Investment Group, in a note to clients. Although past performance is not a guarantee of future results, the S&P 500, Nasdaq Composite and Dow Jones Industrial Average have historically delivered higher returns in the final three months of the year, according to a Dow Jones Market Data analysis of average calendar-year performance. This phenomenon has given rise to the investing adage “sell in May and go away,” which suggests that investors should avoid stocks during the summer months, and come back in September or October to catch the year-end rally. Moreover, the odds of stocks rising in November and December are even higher when the S&P 500 index has declined in August, September and October, as it has done this year. This has only happened five times before since 1950 — 1952, 1957, 1977, 1990 and 2016. In each of those years, the index rose in November. And except for 1957, it also rose in December, according to an analysis of FactSet data by Carson Group’s Ryan Detrick. Stocks have already shown some signs of recovery. After falling into correction territory on Friday for the first time since December, the S&P 500 has bounced back somewhat. It’s now down only 8.6% over the past three months. While this drop has been hard to ignore, Detrick pointed out that the S&P 500 usually sees a 14.3% pullback from peak to trough during the average calendar year. In his opinion, that strengthens the case that stocks are resuming their upward trend. And he’s not alone. “According to seasonality trackers, November is supposed to be the best month after the kind of pullback we’ve had,” said John Stoltzfus, chief market strategist at Oppenheimer. “We think a rally of between 4% and 6% would not be unreasonable,” he told MarketWatch in a phone interview. Stoltzfus on Monday revised his year-end target for the S&P 500 back to 4,400. For comparison, the S&P 500 ended October at 4,193.80, according to FactSet data. Stocks look ‘oversold’ Of course, there are other factors that support the bullish view. These include popular indicators like the relative strength index and sentiment surveys like the American Association of Individual Investors sentiment survey. These are two examples. The AAII’s latest results showed that investors are more bearish than they have been since May. Sharp changes in sentiment are often seen as a sign that investors are either too pessimistic or too optimistic, which could signal a reversal ahead. - The Team at Altos Trading Up next: Can the Fed really be chill about the interest rates this week? Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with [Cash Reserve]( a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. ** The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. How the Fed is Playing it Cool with Interest Rates This Week If you’re wondering what the Federal Reserve is going to do with interest rates this week, I have some news for you: probably nothing. That’s right, the Fed is likely to keep interest rates unchanged at its meeting that ends on Wednesday, after raising them four times since July. Why is the Fed taking a break from hiking rates? Well, there are a few reasons. First of all, the Fed officials are hoping that they don’t have to raise rates anymore, but they’re not ready to say that out loud yet. They want to keep their options open in case the economy or inflation surprises them in the next few months. Secondly, the Fed is facing a lot of uncertainties about the future of the U.S. economy and inflation. For example, how can the Fed justify staying on hold when the economy grew at a whopping 4.9% annual rate in the third quarter and inflation edged higher in September? That sounds like a recipe for higher rates, right? Well, not so fast. Some economists think that the Fed can afford to wait and see because their previous rate hikes are already having an effect on consumers and businesses. Also, the jump in economic growth was partly due to temporary factors like inventory buildup and consumer spending that may not last. And don’t forget that long-term bond yields have risen sharply since September, making borrowing more expensive for everyone. The Fed is also worried about other factors that could derail the economy, such as the war between Israel and Hamas that has erupted in the Middle East, or the looming debt ceiling crisis that could trigger a government shutdown or default. So, what can we expect from the Fed this week? The Fed will release a statement on Wednesday at 2 p.m. Eastern time, followed by a press conference by Fed Chairman Jerome Powell at 2:30 p.m. I don’t expect any major changes in the statement, except maybe some tweaks to acknowledge the recent data and developments. Powell will probably try to strike a balanced tone in his remarks, emphasizing that the Fed is monitoring the situation closely and will act as appropriate. He will also remind us that interest rates will remain low for longer than we think, even if they do hike again later this year. Speaking of which, what are the chances of another rate hike this year? Well, according to derivative markets, they are pretty low right now. But some analysts think that the Fed could still pull the trigger in December if inflation and growth remain strong. Personally, I think it’s too early to tell. A lot can happen between now and December, and the Fed will want to see more evidence before making a move. I think it’s more likely that the Fed will wait until next year to resume hiking rates, unless something really unexpected happens. Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](