1) We're now most of the way through earnings season...
And overall, the results are excellent.
On Wednesday, Creative Planning's Charlie Bilello posted the chart below on social platform X. As you can see, it helps put this quarter's great earnings results in perspective:
As such, it's no surprise that the stock market keeps chugging along... despite its high valuations and some recent volatility. Despite the latest dip, the S&P 500 Index is still within a few percentage points of an all-time high.
As long as corporate profits remain strong, I expect this long bull market to continue – especially if the Federal Reserve continues to cut interest rates.
2) That said, don't be surprised to see pullbacks...
In the November 7 edition of his Week in Charts blog post, Bilello shared a chart of the S&P 500 compared with the percentage of bears in the Investors Intelligence sentiment index.
As he noted, this percentage recently moved down to 13.5%. That figure is in the bottom 2% of historical readings.
Here's the chart:
As Bilello also noted, the last time that the percentage of bears was this low (in January 2018), there was a 12% correction in the S&P 500.
But if you scratch beneath the surface, a large number of stocks are down this year. Take a look at this next chart that Bilello shared in his post:
This reflects the fact that the market is increasingly driven by a small number of stocks.
As this next chart from Bilello shows, it has gotten to the point where the largest 10 stocks in the S&P 500 account for a record 40.5% of its value:
One result of this is that on an equal-weight basis, the S&P 500 is trading at the lowest level relative to the standard market-cap weighted index in more than 22 years – as this next Bilello chart shows:
Below is another chart along the same lines – it's from this recent Wall Street Journal article on why your stocks might not be up:
This is one of the reasons why I recently shifted 40% of my S&P 500 holdings from the traditional index to a market-cap weighted one.
3) As longtime readers know, I'm really into minimalist packing (you can see my tips here)...
But this guy puts me to shame! As his Instagram video shows, he lives out of a backpack that contains everything he owns – and it's smaller than the rolling backpack I travel with!
Check it out:
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.