First, let me say thank you to all the Veterans of this great country. Thank you so much for your sacrifice and service. 

Our analysis on how to play the election was spot on with the HCM-BuyLine® signaling to stay long, take the emotion out, and buy on any pullback. We had built up a sizable amount of new money coming into our funds over the two weeks leading up to the election, and that was fully invested on election day.

A near-term pause/pullback appears likely after the S&P’s 10-12% surge over the past week to just above resistance at the October and September highs of 3550-3580. However, we continue to expect pullbacks to be shallow and short-lived, and we recommend investors continue to build exposure to equities. A simple doubling of the September-November trading range suggests further upside into year-end. This may be optimistic, but we could see a 7-10% move to the upside by year-end. While growth/momentum stocks have stalled, we view their broad consolidations to be intermediate-term in nature, measured in months. Growth is a long way from topping in our opinion. 

Employment trends continue to improve. The number of hires ticked down 1.4% in September to 5.871 million, about in line with its pre-recession level, following several months of significant volatility around the lockdown and reopening of the economy in the spring. Layoffs and discharges declined further. Both indicators suggest that the labor market continued to move toward normalization.

The number of job openings edged up 1.3% to 6.436 million, up in four of the past five months, but that still left it 8.1% below where it was in February, a sign that labor demand has a ways to go before it fully comes back. The number of unemployed per job opening continued to move down, but at 1.96 it shows a significant labor market slack that is putting downward pressure on compensation growth and inflation.

The Conference Board’s Employment Trends Index (ETI) increased 1.3% in October, continuing to recover from its trough in April. Six of the eight ETI components made positive continutions last month, led by a jump in temporary hiring and fewer initial jobless claims. This was the sixth consecutive increase in the ETI, but the smallest in that sequence, a sign that the pace of labor market recovery is slowing.