A volatility spike in November spooked plenty of investors which sent the markets into a tailspin! Volatility (see chart here) woke up last month as the markets digested the constant news flow and fears of an A.I. bubble (click here). This fear also spilt over into the crypto space where we saw Bitcoin, Ethereum and other Altcoins crash as much as 35% last month. For crypto, this is not an unusual drawdown, many times over a 30 plus percent correction has occurred in this sector. What’s different this time was the fear mongering over an A.I. bubble which has been a daily occurrence. This dynamic sent the tech sector down as a whole while also dragging crypto coins and crypto related stocks with it.

What was good to see for the bulls last week was the rally that occurred during the Thanksgiving holiday shortened trading week. This rally which has provided some calm to the market has once again taken the S&P 500 (see chart here) close to its record high. I was just happy to see a short-term bottom seemingly put in from last month’s sell-off.

As we enter the final month of the year the question now on every investor or traders mind is “can the markets muster up a Santa Clause rally?” Each year this is what the bulls hope to see and that is a year-end rally that takes stocks higher. The case for a Santa rally can be made. First, we have the Federal Reserve Open Market Committee interest rate policy meeting coming up on December 9th & 10th. All eyes and ears will be on this meeting to see not only if the Fed will cut interest rates, but even more so, the messaging and tone that comes out of the meeting on future rate cuts. One could say it was the hawkish comments (click here) made by the Federal Reserve chairman Jerome Powell that spooked investors which then spooked the markets and spiked volatility. In the last Fed meeting Chairman Powell stated there was no assurance of a December rate cut and that they will rely on the economic data to provide the necessary guidance as to cut or not.

Suffice to say, the economic data coming out continues to favor a cut in December in which inflation seems to be at least pausing while the unemployment rate is going higher. These are the two key factors in whether the Fed will cut rates again in December.

Good luck to all 🙂

~George