Monday was a solid day for the market, with nine of eleven sectors higher. Technology (XLK) stumbled on news that Taiwan Semiconductor (TSM) is violating U.S. rules on selling specific chips to China.

Market breadth was overwhelmingly bullish. Advancers almost doubled up decliners, and new highs surged above new lows. But it was volume that took my breath away—four billion up volume versus one billion down volume.

Market Breadth	NYSE	NASDAQ
Advancers	1,848	2,880
Decliners	935	1,388
New Highs	91	123
New Lows	28	80
Up Volume	2.66 billion	4.10 billion
Down Volume	989.1 million	1.37 billion

Advancers dwarfed decliners in each sector and saved Energy (XLE).

Metals have curious action, particularly Nucor Corp (NUE), which recently posted punk results. 

Small-Caps

Most factors were green yesterday, but the big story was small-caps across the board.

One Week to Go

I hope we know who the next Commander-in- chief is by midnight next Tuesday. Right now, betting markets, polls, and mainstream media all seem to think it will be Donald Trump. This would be excellent news for small-caps. By the way, shares of Trump Media & Technology Group (DJT) erupted higher by 22.0%.

Today’s Session

Although angst hangs in the air, there are many reasons to feel that the market is entering a season of sunshine.

It reminds me of the Beatles' “Here Comes the Sun.” George Harrison (my favorite Beatle) composed the song during a rough period and after a long winter. Finally, according to Harrison, “It was a really nicely sunny day, and I picked up the guitar, which was the first time in a couple of weeks. And the first thing that came out was that song. It just came.”

This market hasn’t had a long winter, but it has been held back from its potential for various reasons. Now, it could be poised to enjoy a long period in the sun.

Potential Market Movers

Earnings Election Seasonality Fundamentals

Regarding earnings, Wall Street takes its cue from conference calls even more than results and guidance. To that end, there has been a giant spike in mentions of “bottom” during third-quarter calls.

For those not marking or mentioning bottoms, the sledding has been treacherous.

This morning, Crocs (CROX) beat on revenue and posted earnings that were $0.50 better than expected, but it lowered its guidance for the current quarter, immediately slamming the stock.

This points to a potential dark cloud impeding the sun’s rays. The market is expensive by most measures.

According to the Bank of America US Equity and Quant Strategy Team, the S&P 500 is statistically expensive in 19 of 20 metrics.  It's only undervalued, employing market-based equity risk premiums.

Volatility should pick up from here through the election decision, so buckle up, but let's be opportunistic.

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