As Buybacks Return Can The Market Continue To Rally

Inside This Week’s Bull Bear Report

• Market Musters An October Rally
• Buybacks Set To Return
• How We Are Trading It
• Research Report – Recession Fatigue
• Youtube – Market Recap With Adam Taggert
• Stock Of The Week
• Daily Commentary Bits
• Market Statistics – Will Return Next Week
• Stock Screens – Will Return Next Week
• Portfolio Trades This Week

Administrator Note

Admin Note: I am traveling to see my daughter this weekend for the Texas Tech vs. Baylor football game. This week’s newsletter will be shorter than usual, and most of the analytics will return next week. In the meantime, if you have any questions, do not hesitate to email me.

Market Musters An October Rally

Last week, we noted that there were some short-term positive developments.

The market bounced off the 20-dma, turning that previous resistance level into support. That bounce came on rumors from the “Fed Whisperer,” Nick Timaros of the WSJ, the Fed may be considering slowing the pace of rate hikes in December. Such was a welcome relief for the beaten-up bulls, and stocks rallied sharply to close the week.

It will be necessary for the market to rally some more next week and ideally rises above 3800 to confirm another “bear market” rally is underway. Furthermore, the positive divergences of the MACD and RSI indicators also support the short-term bullish outlook.

Such was the case this past week. The market rallied above the 3800 level, retested it Thursday, and then rocketed higher on Friday, breaking above the 50-dma and touching the 100-dma. Such confirms the bear market rally remains intact.

Over the last several weeks, we have repeatedly made the case why this market rally was likely, and all that we needed was some news flow to spark a buying panic. Of course, the rise in market chatter about a Fed’ pause’, ‘mini-pivot,’ or ‘step-down’ in its hawkishness provided the narrative to send shorts scurrying to cover.

For some context, the Dow is on pace for its best month since 1976. It is also close to its best month since 1938. So far, the Dow is up four straight weeks (+14%) and is posting its biggest 4-week gain since April 2020. Despite dismal FANG earnings, the Nasdaq is ‘only’ up 5% on the month.

With those gains, it was not surprising to see articles flipping bullish. To wit:

“Here’s a little news flash. Tech stocks have entered a brand-new bull market that could be the start of a massive 50%-plus melt-up. And certain tech plays could see a 10X surge higher!“

While that will likely be the case eventually, it is too soon for that now. We still have an earnings recession to get through and have just started that process. More importantly, the lag effect of rate hikes won’t take hold until the first half of next year.

However, for now, there is a prime catalyst for pushing stock prices higher near term coming online – buybacks.

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Buybacks Set To Return

Stock buybacks, or corporate share repurchases, are set to return next…