The Monday Morning Playbook: Week of November 11, 2024

Good morning,

In today’s politically charged times, it’s best to keep things simple.

Like children’s book level simple.

We all know the results of the election, so let’s break down what happened in the market into some easy-to-understand categories.

First up: Bang!!

A whole lot of the market exploded higher ahead of and after Tuesday night’s results. From software to capital markets to bitcoin to small caps, it was the best week in years for a number of notable groups, many of which are held in our ETF portfolios.

What went Whoops?!

Rates and the dollar.

Now it’s just one week, but after running up 75 basis points in the lead-up to the election, the 10-year yield reversed hard at last week’s level to watch: 4.35%. And both it and the dollar registered MACD sell signals at key resistance levels last week, despite the narrative favoring more gains.

And finally what was: Ehhh…

Well, participation and breadth to some extent. Now don’t get me wrong, we saw a strong surge in new high readings, a bullish signal for future returns.

But looking at daily advancers vs. decliners, we never saw the sort of “buy everything” rally that has accompanied elections and early November rallies in recent history.

The primary culprit was defensives. That may sound obvious amid a risk-on move but investors shouldn’t get tripped up trying to decide between growth stocks or cyclical value when there are opportunities on both sides.

Being overweight stocks and underweight defensives has been the most consistent call in these pages this year and it remains the primary playbook for a year-end rally.

To that end, tomorrow’s Overtime report will highlight ETFs and stocks (outside of ideas already represented in our ETF portfolios and Blue Chip Hot List) that could be poised for outsized returns through the end of the year.

This week’s report will be more backward-looking and review:

• Last week’s biggest winners

• The reversal in rates

• What couldn’t rally

• and more!