To The Moon

Thanks Tiger for awarding the weekly top predictions for QQQ and SPY! The S&P 500 rallied on Friday without participation from Apple since the poor earnings sentiment on Thursday. Get ready for more action next week! 🍏

Stocks closed sharply higher Friday to extend a monster rally that saw the big three indexes sweep to their biggest weekly gains of the year, as investors grew more hopeful that the Federal Reserve's interest rate hikes might have ended.

The rebound this week came as the S&P 500 closed out a dismal period of three months straight with losses. The rally this week was sparked by the Fed’s decision to hold rates steady for a second straight time, along with the Department of Treasury’s borrowing plans that were less burdensome than feared.

Bond yields, which have weighed on the stock market the last three months, tumbled Friday in the wake of the softer-than-expected payrolls figures and lighter average hourly earnings increase. The 10-year Treasury yield lost more than 9 basis points to 4.57%, down from the 5% high it hit last month. The 2-year Treasury yield lost 13 basis points to 4.8%.

The October jobs report Friday came in weaker than expected, showing the Fed's campaign to cool the economy and stifle inflation could be working. It’s believed that the Fed could be done with rate hikes. The economy is strong so no prizes in guessing where the market is heading in the last two months of this year. Octoberphobia scared many, but what we've seen is perfectly normal.

5 days of green consecutively

Remember, the “Weekend Effect”? Traditionally, the weekend effect has implied that stock returns on Mondays are often notably lower than those of the preceding Friday. Monday’s lows would offer investors ample opportunities to lap up undervalued and bargain stocks.

This is changing. The erstwhile Monday effect now appears to be dissipating. Evidence can be seen in the review of the performance of the three major U.S. market-tracking indices provides a very interesting conclusion. 

Over the last six months, the stock market experienced gains on 20 out of 24 Mondays. That’s 83% of Mondays ending in the green. Here’s a chart depicting the findings:

Green Mondays to continue?

Of the 24 Mondays between May 1, 2023 and Oct. 31, 2023, the S&P 500 Index (SPX) closed positive 20 times, implying an 83.33% probability for the market to close higher on Monday.

The S&P 500 has some crucial level to break for further expansion to confirm its bullishness. There will be minor pullbacks along the way but do monitor if the ascension is kept in pace with the trend toward the Santa rally in December. Be nimble to ride the momentum instead of being a FOMO later on.

Weekly option trades summary 

Among the top stock market benchmarks, the Dow Jones index rallied 5% for its best weekly showing since October 2022, the S&P 500 jumped 5.8% and the Nasdaq Composite surged 6.6%, the strongest week for those indexes since November last year.

In addition , the following indications happened right as stocks entered one of their most bullish periods of the year:

*AAII bull/bear spread lowest since Mar

*BofA Bull/Bear Indicator lowest since Nov '22

*NAAIM Exposure second largest decline EVER

*CNN Fear & Greed Extreme Fear in early October

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