Bargain Hunting the Market’s “Stealth Correction”

Markets have sustained a stealth correction over the past six weeks.

In September, eight of 11 sectors sold off, with utilities, real estate, and consumer defensive stocks among them.

Thanks only to Big Tech stocks, the S&P 500 Index eked out a 0.5% gain for the month.

As we move into mid-October, and with the midterm elections only 18 days away, markets are rotating again.

Yields appear to be peaking, and interest-rate sensitive stocks are catching a bid. And now, Big Tech stocks have endured a steep decline over the past few sessions.

What does the future hold?

Yes, the perpetual question for the Grey Swan community!

If you’re looking ahead to the midterms, the noise and stealth correction of the past few months become much more bullish:

In every post-World War II midterm cycle, markets are higher a year later. That doesn’t mean there won’t be volatility. Or big winners and losers. But it’s one of the strongest periods for the market in the entire four-year presidential cycle.

So as we near the midterms, we’re going from cautious to a bit more optimistic. If bond yields trend lower – as has been the case this week – it could light a fire under the stock market and lead to a strong push into the end of the year.

We will no doubt still get buffered by volatility. And perhaps a brief bout of post-midterm chaos.

Expect it. But don’t bet on it.

We’ll have some news that casts doubt on the market, particularly the downgrading of hyperscaler debt. But history is a pretty clear guide against getting too pessimistic… yet.

Andrew is seeking bargains following the recent sell-offs, including a headline chipmaker, which he recommends for today’s Pro speculation.

~ Addison

P.S. Politicians have plenty to say about the future. But where they’re putting their money might be more revealing.

With the midterm elections creeping up, Washington is gearing up for a political showdown. The results could change more than who’s in charge. They could reshape the policies, markets and investment opportunities ahead.

That’s why Andrew Zatlin joined us yesterday on Grey Swan Live! Andrew provided a lively discussion of the economic data, lawmakers’ own investments, and the defense stocks he’s interested in now ahead of the midterms.