Why I'm Expecting Stocks to Rally In Both November And December

Market Performance - The Dow is up 11.6%, the S&P is up 14.6%, and the Nasdaq is up 18.4% year-to-date, indicating a strong market performance with potential for further gains [1] - Historically, Q4 is the best quarter for stocks, suggesting continued upward momentum [1] Seasonal Trends - In post-election years, November has a 72.2% likelihood and December a 77.8% likelihood of finishing positively, indicating favorable seasonal trends for the market [2] Economic Indicators - Tamer inflation reports and a resilient economy contribute to a positive market outlook, with expected interest rate cuts further supporting stock prices [3][15] - Core inflation is reported at 3.1% year-over-year, down from 3.3%, and the Producer Price Index has eased to 2.8% year-over-year [15][16] Earnings Growth - Q4 earnings growth is forecasted at 7.3%, with Q1'26 and Q2'26 expected to grow by 9.7% and 11.0% respectively, indicating a strong earnings outlook [18][19] Small-Cap Stocks - Small-cap stocks are experiencing a rally, supported by expected interest rate cuts and favorable tax provisions from recent budget bills [20][22] - The anticipated growth in small-caps is linked to their earlier growth cycle and the ability to invest more due to tax benefits [22][23] Technology Sector - The ongoing AI boom is expected to be transformative across industries, with significant growth potential and real earnings supporting the market [8][12] - AMD and NVIDIA CEOs highlight the insatiable demand for AI, predicting substantial growth in the AI market, including a potential $1 trillion AI data center market by 2030 [12][13][14] Investment Strategies - Proven stock-picking strategies, such as focusing on Zacks Rank 1 Strong Buy stocks, have historically outperformed the market, with an average annual return of over 24% [25][26] - Strategies targeting small-cap growth have shown even higher returns, averaging 44.3% over the past 25 years [31]