Date: November 5, 2015

Pullback to Buy

Stocks are finally seeing some pause in the relentless rally that began a little over a month ago. It should be mild, relatively painless and in the 1-3% range. As I continue to mention, any and all weakness is a buying opportunity until proven otherwise. And there’s a chance that the “proven otherwise” won’t be seen until well into 2016.

Internally, the stock market has been and is on solid footing. As you can see from the chart below, the NYSE Advance/Decline line continues to rally from early October. That shows more and more stocks are participating in the advance. The key thing will be if this indicator moves up to an all-time high, which would further insulate stocks from significant weakness and forestall any bear market.


Right now, banks are holding up really well, anticipating a December rate hike by the Fed. Should the banks maintain their leadership, that would positive ramifications into 2016. Finally, high yield bonds are hanging in with energy pulling back. If this continues, it would be yet another plus in a long line of positives.

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Paul Schatz, President, Heritage Capital