Score one for bulls. There was lots of fear that the market was headed for tumble coming out of September, but October turned into a positive run as the VTI (US market) advanced 7.88%, the SPY (SP500) +8.50% and the VT (international x-US) +6.86%. The SP500 is now back into the middle of the range it held from February until August. However, a good portion of the advance is made up of a smaller list of higher cap “momentum” stocks such as AMZN, GOOGL and FB. If you look at the overall US market (VTI), it is just cracking the bottom of its range. This lack of equal participation may be a warning signal that we moved to far too fast.

The AGG (aggregate bond index) finished a few basis points above breakeven at +0.07%. Treasury rates were up slightly, the 2-year +11 basis points, 5-year +15, 1-year +11 and the 30-year +8.

Credit spreads narrowed during the month, lowering fears that the bond market might be on to something much worse, and providing fuel for M&A. The ECB indicated it might purchase more bonds, lower interest rates in China, and indications that China is in for a softer landing, all helped the markets.

This week the Fed talked tough and indicated there was a good likelihood for a December rate increase. Economic conditions remain similar to September, when it seemed like the Fed would never raise interest rates. But a slightly better outlook from China and a strong market might be pushing the Fed to a more aggressive stance. We will see if they follow through.