This is a new bull market that could rally further in November, according to the Stock Trader’s Almanac

Published Fri, Oct 28 202212:16 PM EDTUpdated Fri, Oct 28 20221:03 PM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Stocks' surprising strength in the face of Big Tech's disappointing earnings could signal the start of a new bull market, according to the Stock Trader's Almanac. History shows that October has seen several market bottoms, while November typically serves as the start of one of the stronger season periods for stocks. "The jury is still out on whether October has killed another bear market. But with the Dow up 11.5% so far in October 2022, it is on pace to record its best October performance ever going back to 1901. While many analysts, technicians and pundits continue their deliberations we lean toward the case that we have entered a new bull market — at least for the near term," the Stock Trader's Almanac said in a note on Thursday evening. November marks the start of several seasonal strong periods, including the best three consecutive months for the market. Since 1950, the S & P 500 and Dow Jones Industrial Average have averaged a gain of at least 0.9% in each of the next three months, according to the almanac. The Dow, S & P 500 and Nasdaq Composite have all fallen into bear markets this year, defined as being 20% or more below their recent highs. One contributing factor to the bear market has been the Federal Reserve's rate hikes, but some Wall Street pros are expecting the central bank to slow or even pause those hikes in the coming months. The political cycle also could be a boost to stocks, with midterm elections less than two weeks away. November tends to be the best month of the year for the Nasdaq during midterm years, according the almanac, and it is a strong period for the Dow and S & P 500 as well. "Midterm November is also the 1st month of the best six consecutive month period and the Sweet Spot of the four-year cycle," the note said. The technical setup also is encouraging for the markets. The three major averages have made 52-week lows in recent weeks, which may prove to be a bottom. "Major indexes have bounced off their recent lows and appear to be looking forward to the end of the Fed's rate tightening cycle. DJIA has reclaimed it 50-day moving average. S & P 500 and NASDAQ have not. [Moving averaged convergence/divergence] indicators remain bullish. Further gains will be needed to truly confirm a new bull market," the note said.