Morning Notes — Q4 Outlook

Expect the S&P 500 (SPX) rally to decelerate in the days ahead as the index faces internal technical resistance at ~4620. November starts the seasonally strong period into year-end with the month averaging gains of +2.7% over the last 10 years and positive returns in 9 of 10 years.  Seasonality seems like a weak basis for an investment decision, but it is something to consider as PMs may need to chase performance into year end.  Sector performance will be a major swing factor as the recent SPX advance has mostly come from outperformance in Tech, despite Q3 earnings disappointments from large cap standouts AAPL, AMZN, FB and SHOP.  Better MSFT results clearly helped the group, but the outperformance in Tech follows recent flattening of the US yield curve on rising expectations for Fed policy mistake.