The stock market experienced a mild correction in the last half of October. It has rallied back to recapture roughly half that decline. We will watch the market closely in the next few days. If the market can shrug off this morning’s disappointing economic news (10.2% October unemployment report) and continue to rally, the major indexes could challenge the recent uptrend highs within a week or two setting the stage for an important end-of year rally. If the market sells off from its current level, however, we could quickly retest the recent lows. Penetration of those lows would send a powerful signal to many portfolio managers that it is time to lock in gains for the year.
High yield bond and other low-volatility uptrending bond/income funds have weakened. Some have declined a little, but few have declined enough to trigger reasonable sell stops. For the moment we will not be adding new positions to any high yield bond funds or stock funds. We will wait to see how the market behaves for now.