Seasonal uptrend. It’s beginning to look a lot like a Santa Claus rally as the S&P 500 Index pushes toward its ninth record high in three weeks. The S&P 500 hasn’t posted two consecutive declines for 27 trading days, the longest streak since January 2012. The benchmark also just broke a 24-day streak of being above–but not touching on an intraday basis–its 10-day moving average, which was its longest streak since March 1998. Stocks have crept higher in an unusually calm fashion, with the S&P 500 trading in a range smaller than 1% in 24 straight trading sessions.
Too calm? Equities may continue to trend higher through a seasonally strong end-of-year period, especially after breakthroughs on the trade and geopolitical front. However, stock volatility is calming, and history tells us things won’t stay calm forever, so we recommend that investors consider preparing for periodic volatility. We see multiple levels of technical support below any pullbacks, most notably the July and September highs near 3,030 and the 200-day moving average of 2,907.
Retail sales rise. U.S. consumers increased their spending in October, an encouraging sign as the holiday season approaches. Retail sales rose 0.3% last month, beating consensus estimates for a 0.2% gain. Control group sales, which we view as a cleaner measure of retail sales’ contribution to gross domestic product, rose 0.3%. Consumer spending has powered the U.S. economy this year as businesses have curbed investments while waiting for trade and geopolitical uncertainty to fade. We expect the consumer to drive future growth, aided by strong labor market conditions. We’ll dig more into the October retail sales data today on the LPL Research blog.
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