“US stocks just went from massively oversold to massively overbought in such a short period,” he said. “So November’s strong run could end up stealing some of December’s historic strength.” In response, Frank is buying shares of small- and mid-cap staples companies that are known for their dividends.

However, bulls are getting reassuring signs from corporate executives, who bought more of their firms’ shares in November, pushing the ratio of buyers to sellers to the highest level in six months, data compiled by the Washington Service show.

The options market also is giving off a sense of confidence. The VIX futures curve — a tool often used as a guide for speculative positioning in the months ahead — shows a lack of crash-protection demand. It’s now lower than it was at the start of November in a slew of maturities. 

While there may be minimal suspense around the Fed’s Dec. 13 policy decision, where the central bank is widely expected to hold rates steady, there’s still potential for turbulence from the economic projections it releases that day and Powell’s press conference. On Friday, the Fed chair brushed off bets on rate cuts by mid-2024 — but bond traders only doubled down on wagers that the Fed will ease next year.

“A dovish pivot eases some of the near-term market and longer-term recessionary tail risks,” said Dennis Debusschere, founder and chief market strategist of 22V Research. “A more dovish Fed is less likely to push back against the recent easing of financial conditions. That should benefit riskier parts of the market.” 

This article was provided by Bloomberg News.

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