The U.S. stock market rallied on Friday, sending the S&P 500 and Dow Jones Industrial Average into record territory, after a surprise stimulus plan from the Bank of Japan was announced.

Some analysts noted that the recovery from the recent pullback, which sent the S&P 500 down nearly 8% early this month, was the second fastest recovery since 2010. The main benchmarks finished the week and the month higher.

The measures announced by Japan appeared to encourage investors, who have been looking for regions like Europe and Asia to take further steps toward boosting flagging growth, as the Federal Reserve wraps its own stimulus program.

The S&P 500 SPX, +1.17%   closed at a record high, having rung up a new closing high every month since June 2013, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

The benchmark index gained 23.40 points, or 1.2%, to 2,018.05 on Friday.

The Dow Jones Industrial Average DJIA, +1.13%  also closed at a record level, having hit an intraday high in morning session. The blue-chip index rose 195.10 points, or 1.1%, to 17,390.52, and recorded its biggest weekly gain in nearly two years. The Dow swung wildly during October - moving triple-digits 16 times out of 23, but still ended the month higher.

The Nasdaq Composite COMP, +1.41%  rallied 64.60 points, or 1.4%, to 4,630.74 and closed at the highest level since March 2000.

source: http://www.marketwatch.com/story/us-stocks-futures-point-to-wall-street-rally-after-boj-surprise-2014-10-31?siteid=yhoof2

So what is there to learn from the almost-correction in the first half of the month? Zachary Karabell, head of global strategy for Envestnet notes, “there have been multiple periods like this in the past three or four years where there’s been huge amounts of volatility or churn and the headlines throughout each of those periods forecast all the dominoes falling...and then we kind of end up kind of in the same trend line we’ve been in.”

Karabell says this time is no different. “As long as there’s decent economic growth, and more than decent earnings growth, and some decent revenue growth on the part of companies, stocks are gonna go up,” he contends.

That, he says backs up his belief that for all the gnashing of teeth over the Fed, Yellen and company aren’t THE engine behind the markets but rather are one of many engines. As the QE liquidity program goes into storage the Bank of Japan announces the latest round of their own version and that, says Karabell, means there will always be enough global liquidity to go around.

So how do you play such a market? Don’t be a “trader” Karabell says. He believes once we crunch recent data we very well might find that rapid traders will under perform good old buy and hold investors. “I don’t think selling right now is necessarily the way to go unless you’re so convinced we’re gonna have the same patterns” we did earlier this month.

Sure, if you believe in your heart of hearts that stocks are headed back into correction territory then find a comfy chair and sit on the sidelines. If, however, you are like Karabell and believe the economic and earnings soil is rich enough to grow stocks then get invested, keep getting invested and sit tight.

It may not be exciting investing but it’s Karabell’s recipe for success.

source: http://finance.yahoo.com/news/forget-the-fear--s-p-500-handily-beat-it-s-october-average-145256262.html 

01 Nov 2014