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With the Dow up over 14% so far in October 2022, US markets are on pace to record their best October performance ever going back to 1901. While many retail investors remain bearish (see the AAII Sentiment Poll results below), we feel a new bull market is emerging – at least for the near term. Read more ➝

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October is known as the ‘bear killer’ month. In US mid-term election years it can provide especially strong returns. With the economy faltering and inflation still too hot, investors are skeptical. We wait for confirmed bullish signals as markets set up for a bounce.

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The US presidential election cycle last four years and shows definitive patterns historical that point to weakness in the first half of the second year. This leads to a run up in Q4 following thru to Q1 of year 3. This is known as the ‘sweet spot’ for investors.

The summer rally has impressed as the major averages pushed back to their respective 200-day moving averages, a key technical level where they stalled last week. Now they are testing new short-term support around the June highs and the 50-day moving averages. Investors are clearly not out of the woods yet.

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