September Slump
September Slump
Seasonality Points To Stock Market Headwinds
The Markets
Right on cue, September starts by honoring seasonal tendencies.
After a late-day rally on Friday closed the week on a positive note, markets responded by continuing in the chop zone and pushing the lows. All four major indexes are off today, with QQQ and IWM down the most, roughly -3% each. SPY is down -2% on the day, and DIA clocks in at nearly -1.5%. The September slump is off to an early start.
Here are a few looks at seasonality from some friends.
Ryan Detrick at Carson Investment Research points out that September is usually a rough month for markets overall, and election years are no exception. The bright side? He also says,
“Year-end rallies are quite normal after the election is out of the way.”
Grant Hawkridge at Allstar Charts showed it another way. His chart demonstrates average returns for the S&P 500 during election years compared to actual results through August 30. Notice that the decline usually starts in the second half of September and doesn’t find a bottom until sometime in October.
And here’s Jeff Hirsch (The Stock Trader’s Almanac) showing the data for the other major indexes, too.
So, there is very likely a notable headwind for stocks over the next 30-60 days. Surprises can and do happen. But moving on to new highs during this time appears to be an uphill battle.
Awareness and adaptability matter. Here are some summary points from the Weekly Chart thread, in case you didn’t see them.
The charts are very bullish long term. Many breakouts. Many new highs. Many strong uptrends. Broad participation Etc.
Which squares well with the seasonal tendencies. Now we're moving into September, which has a different history.
So, it may be time to temper expectations a bit until we get through Sept. and closer to the election.
Let’s go to the charts.
The Charts
SPY moved to the gap high and 50-day MA before getting a slight bounce. $547-8 is a key area to hold with the AVWAP from the August low below there, near $543.
QQQ is below the 8, 21, and 50-day MAs and breached the AVWAP from the August low before closing just above. The March pivot high at $449.34 is the next potential support level.
IWM has a confluence of potential support near $211-$212 in the March pivot high, the 21 and 50-day MAs, and the AVWAPs from the July high and August low. If that fails to hold, the 200-day MA is rising up from $201s.
DIA continues to hold up best after putting in a new daily high on Friday. It has a gap and the 21-day MA near $403 for potential support, followed closely by the 50-day MA.
TLT moved more slowly today, hanging in between its 8 and 21-day MAs, which are now pointing lower. Watch the $96.40 pivot for potential support.
DXY US Dollar futures touched their 21-day MA, which could be a reasonable place for this bounce to pause or stall.
BTCUSD is below the August low AVWAP and could test the Fibonacci retracement near $52k.
The Trade
Once again:
So, it may be time to temper expectations a bit until we get through Sept. and closer to the election.
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The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”), an SEC-registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent that person’s opinions only and do not necessarily reflect those of T3TG or any other person associated with T3TG.
Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual, or it may reflect some other consideration. Readers of this article should consider this when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors before making any investment decision.
POSITION DISCLOSURE
September 3, 2024, 4:00 PM
Long: XBI0920C105
Short:
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