Market Call: October Is Here. What Could Possibly Go Wrong?

We asked the very same question at the start of September, and were hard pressed to come up with an answer. We concluded: "So perhaps, the path of least resistance will continue to drive stock prices higher. We are still expecting a yearend rally to 5800 on the S&P 500, but it could already be underway." The S&P 500 rose 1.6% during September as of Friday to close at 5738.17 with one more day to go in the month (chart).

The only slipup occurred at the beginning of the month following a weaker-than-expected August employment report. The same happened in early August following a weaker-than-expected July employment report. In both instances, we quickly recognized that the selloffs were likely due to carry-trade unwinds that would pass quickly.