NEW YORK ( TheStreet) - Riskier stocks -- known as high-beta stocks -- led equities in November, a signal of positive momentum.
The chart below is of PowerShares QQQ (QQQ) over SPDR S&P 500 (SPY). The chart shows the Nasdaq's relative strength versus the S&P 500. Investors usually favor riskier stocks when they are confident about the economy.
Stable monetary policy was the main reason for stocks' strength in November. Investors realize that the Federal Reserve will likely maintain its current level of easing into 2014. The Fed seems to think that the economy isn't yet ready to operate without intervention, and Fed nominee Janet Yellen is a known policy dove who will likely keep stimulus intact next year.
The current equity uptrend looks to be very strong with solid support levels under most equity indexes across the globe. That provides the confidence that even if we do get a correction lower, buyers will step into the market when prices fall far enough.This reasoning goes back to stable monetary policy. Central banks have made it clear that they are committed to stimulus. That creates a safety net that deters prices from falling too far.