After a political deal was struck last week, it felt as though you had sat through a bombardment in a fox hole, then peeking out afterwards and finding that you are still alive; a relief for sure. However, investors never entirely bought the default thesis. Most thought they had seen this scenario before and sat it out. Although somewhat more volatile, the stock market never broke down. In fact the market was up over two hundred points on D-day (the last day before default). Since the provisional agreement, the S&P and NASDAQ have made new record highs; quite a remarkable week.
Now back to business fundamentals. Companies, during the week, continued to report their results for the third quarter. The picture that is emerging is that it was another good one. Sure, a few companies had poor results, but most posted surprisingly strong earnings. As long as that trend continues this week, markets ought to break out to new highs. A strong argument for this happening is that our research shows money flows are still accelerating into stocks.