Quick note on podcast cadence: This coming Friday we will have a special podcast release talking about the Canadian Budget. Tune in on LinkedIn if you want to hear our views.

Markets

Good, some bad, and a little bit of ugly

We’re getting a lot of emails and calls about whether were due for a bear market.

And It’s always important to bring back the conversation to time horizon.

Some folks are short term swing traders... Most are long-term investors. Many find themselves somewhere in between.

What I want to remind everyone of today is that the longer your timeframe is, the more important asset trends become. And one thing we know for sure, asset prices trend.

Right now, the most bullish data on the board is that long-term trends remain firmly intact across stock markets around the world — not just in the U.S. and Canada.

This is the good: The S&P500, Dow Jones Industrial Average, Nasdaq100, TSX and Russell 2000 Small-cap Indexes all finished October with their highest monthly closes on record.

Europe, Japan, China, Latin America, and London all went out at new highs for the cycle as well.

This isn’t just a U.S. technology bull market.

Consolidation continuation:

Back in early October, we talked about what this market correction should feel like — and the traffic jam analogy still fits perfectly.

This is the bad part of the current environment: There’s simply more supply than demand for stocks at these levels. And much of that can be explained by a historical equity run up from the April lows.

In other words, there are still plenty of investors looking to sell into strength, no matter how strong the longer-term trend remains.

The best visual of this came to my inbox curtsy of Trend Labs:

This chart of the small-cap index remains the cleanest visual of overhead supply in today’s market — and it’s also one of the most important gauges of market breadth.

If the Russell 2000 is in an uptrend, you probably don’t have a breadth problem.

The percentage of stocks on the NYSE that are above their 200-day moving average (in other words, in uptrends), peaked back on September 11th.

Whats happening with market leadership?

The good news is that the worst part about this market can easily be corrected with one day of action, AND it falls within the context of a strong uptrend.

So even the ugly here needs to be viewed within the context of the current cycle.

This is a chart of the First Trust Nasdaq-100 Equal-Weighted Index Fund (QQEW) failing to hold on to its breakout from last week.

Momentum is also putting in a bearish divergence, which doesn’t help the situation:

This index gives each of the 100 stocks an equal weighting, rather than the larger companies representing a larger percentage of the overall index, like the market-cap weighted Nasdaq-100 (QQQ).

The longer the equal-weight Nasdaq-100 (QQEW) is below 144, the longer this correction will last. Same with the Russell 2000 Index (IWM).

It doesn’t mean the market is going to crash, or that we’re beginning some kind of epic bear market. It’s just the same ongoing correction that we’ve been talking about for over a month.

Recap:

It’s a bull market, at the end of the day.

So even though this post is mostly about the bad, the ugly, and the wave of selling pressure we’ve seen in recent weeks, the bigger picture remains the same: We’re still in a powerful uptrend, and there’s little to no evidence that it’s over.

Sector rotation is the lifeblood of a bull market. We know this — and we keep seeing it.

Healthcare was the worst sector. Then it became the best.

Energy was the worst, and now it’s heating up again.

What will come of Q4?

Podcast & YouTube Recommendations🎙

* Gavin Baker on Ai, technology business models

* It’s still so early! A16Z Founding partners talk about the current state of Ai:

Best Links of The Week🔮

* “Google is about to release Gemini 3 and my smart friends tell me it is expected to be better than the de facto leader in AI coding - Claude from Anthropic. That means that the top two AI coding products by far will have both been trained using TPUs (Google’s chip), not GPU’s (Nvidia). On top of the data they own from Android, YouTube, Gmail, Maps etc…I think the world is realizing that Google may have an edge” Here comes Google - Howard Lindzon

* “Advanced Micro Devices, the main contender to Nvidia in the artificial intelligence chip market, failed to impress investors with its revenue forecast after an eye-popping rally sent expectations soaring. Fourth-quarter revenue will be roughly $9.6 billion, the company said in a statement Tuesday. Though analysts had estimated $9.2 billion on average, some projections ranged as high as $9.9 billion. Investors have bet heavily on AMD following blockbuster agreements with OpenAI and Oracle, which plan to use the company’s chips in their build-out of artificial intelligence computing. The hope is that AMD can finally crack Nvidia’s dominance in the AI processor market.” Source: Bloomberg

* “WhatsApp announced on Tuesday that it’s launching an Apple Watch companion app. For the first time, WhatsApp users will be able to use their Apple Watch to get call notifications, read full messages, and record and send voice messages.” Source: TechCrunch