These three factors are driving the market

Here’s your guide to navigating them EDITOR’S NOTE: I’m sharing some market analysis from the team over at Avalon today. From time to time, I like to give you a behind-the-scenes look at what clients at money management firms come to expect from their investing teams. Dear Reader, October is seasonally a weak period for the stock market, and this year certainly lived up to that expectation. From largecap (SPY) to smallcap (IWM) and including international equity (EFA), each was lower by month’s end. In fact, the S&P 500 logged its first three-month losing streak since 2020. Fixed-income securities did not perform any better as U.S. government bonds showed losses across intermediate (IEF) and long durations (TLT), and junk bonds (JNK) also showed a loss. TBills (SHV) and money markets were the one place where investors were protected while providing annualized yields of around 5%. Looking more closely, we can see that October was a good month for several commodities but pretty rough for the rest of the market. Until last week, the “magnificent seven” mega-cap technology stocks had been holding up the Nasdaq 100 and S&P 500, but earnings finally gave bears an edge there too. As a result, the S&P 500 has fallen by more than half from its peak return of +20.61% at the end of July. Here’s a closer look at how these stocks have been performing of late (as of Friday, October 27, 2023): Apple 15% off yearly high Microsoft 10% off yearly high Alphabet 13% off yearly high Amazon 12% off yearly high Nvidia 19% off yearly high Meta Platforms 10% off yearly high Tesla 30% off yearly high The FAANG index, shown below, shows some technical damage with last Thursday’s move below the support level that had held the previous declines. With a pattern of lower highs and lower lows, it appears this group may soon decline “magnificently.” One of the dominant characteristics of this year’s stock market has been the narrow breadth and the recent expansion in stocks making new lows… this does not make for a healthy market. While seasonal factors do become more positive, it's important to note that seasonal factors are simply tendencies and no assurance of how the market will perform. Earnings, interest rates, and geopolitical risks are the current dominant factors that will likely determine the course of the market through the end of the year. As the market continues to give everyday investors whiplash, here at Avalon we aim to empower you as much as we can to keep your hard-earned money safe. [Our free guide]( shows you why the old “tried-and-true” methods of 60/40 investing are over and which new methods are taking their place. You’ll also learn how to make the best choices with your investments moving forward. [Sign up now]( and we’ll immediately email you our free eBook – Death of 60/40: Why Old “Tried-and-True” Methods of Investing Are Over (And What New Methods Come Next). You’ll also receive a complimentary subscription to ADAPT where we send you investment tips and ideas to help strengthen your portfolio. Don’t wait to get this critical information because the choices you make now could determine your financial future. Best, DISCLAIMER: True Market Insiders sent this to you on behalf of a third party, Avalon, a registered investment advisor. Avalon and True Market Insiders are separate entities. Neither company owns the other. Both companies are owned by Chris Rowe. This article is an advertisement to sign up for a free e-letter called ADAPT, which is published by Avalon. True Market Insiders is NOT a registered investment advisor and is not licensed to give advice. 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