6 Months of Stock Gains…What Comes Next?

The S&P 500 just recorded its 6th straight month of gains. However, other signs in October point to a softening of the bull market. That includes the 1% loss for the Equal Weighted S&P 500 (RSP) which removes the bias that comes from the Mag 7 stocks.

This is not a reason for alarm. The market has earned the right to take a breather after such a long run to new heights. Yet it does beg the question of; What comes next?

I will try and answer that in today’s market commentary as we also assess the oddity of the situation of monitoring the economy during a government shutdown that slows the flow of fresh data. 

Market Commentary

This is going to be a shorter than usual commentary. The main reason is the lack of new information to consider to alter the course of the bull market. And that is because of the Government shutdown.  

Meaning that with a shortage of fresh data on the economy + a Fed that has lowered rates and probably will again...then there is no reason to doubt the time honored saying of “Bull Market til Proven Otherwise”.

That is the basic long term outlook.

Yes, the market is looking a bit rich in terms of valuations and could took an extended breather at any time. My past commentaries have shared quite a bit on that front. But the most complete analysis was shared in my 10/12/25 webinar that you can watch if you have not already:

Should You Fear THIS Stock Market Bubble? >

In the short run we gladly have good news coming from Q3 earnings season. That tells you enough about the health of the economy without needing the typical government reports.

Here are the highlights from Q3 earnings season:

83% of the S&P 500 companies have exceeded earnings. Much better than the 76% average the past three years.

80% also showed sales beats which is even more impressive vs. the typical 67%.

Most importantly, earnings estimates for the future are going higher. Not by a lot...but at a healthier pace then we have seen in quite a while.

As for the Fed they did lower rates for a second straight time on 10/29. However, I think the message from Powell is clear that the market is wrong expecting more cuts coming soon.

That is because they now believe they have stopped the restrictive aspect of higher rates and are now at a more neutral balanced position. This is exactly where they want to be given the divergence in their dual mandate.

The jobs picture has worsened and thus are prepared to lower rates to support full employment. This is 100% about the uncertainty over tariffs. Do not let anyone blow smoke up your backside that there is any other reason.

Uncertainty = pause...and that includes pausing of new hires for companies. That will improve once there is more certain than uncertain about long term tariffs.

Whereas the inflation picture has remained stubbornly high. No doubt the short term costs of tariffs are not helping matters. And thus, if this persists too long then the Fed will be tempted to raise rates.  

The market did adjust somewhat after this announcement by lowering expectations for a rate cut at the 12/10 meeting from 94.5% not 65%.

I still think that is too high of an expectation given what the Fed said. But still plenty of time for investors to adjust.

Back to the intro where I talked about some signs of the broader market weakening. That is not just from the modest loss for the Equal Weighted S&P 500 (RSP) in October. It is also in the swirling nature of stock prices.

We often call this sector rotation...or consolidation...or change in leadership...or simply increased volatility.

This is a healthy and normal outcome after the massive gains we have seen from when this latest bull run began in early April.

How long will it last?

How low could we go in the meantime?

When will we take off to make new highs?

All unknown and unknowable. Thus, we are better served staying 100% long based on wisdom of “Bull market til proven otherwise”.

And thus good to restock our portfolio with new positions packed to the brim with the goodness found in the 115 factor review of the Zen Ratings. That is exactly what we are doing with the 5 new additions to our portfolio today. 

What To Do Next?

Discover the Zen Investor service that relies upon my 45 years of investing experience. 

During that time I have learned vital lessons from 7 bear markets…8 bull markets and just about everything else the “Mr. Market” can throw at us. 

I use this knowledge to create a detailed investment plan. Then lean into our proven Zen Ratings quant model to select the best stocks given their average annual return of +32.52%. 

In total the Zen Investor portfolio now has 20 top stocks that are hand picked for today’s unique market landscape. 

Plus 5 new stocks I just added in early November with stellar upside potential. 

If you are curious to learn more, and want to see my current top 20 stocks, then please click the link below to get started now. 

Discover the Zen Investor & Top 20 Stocks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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