This September To Remember

Discussion in 'Trading' started by stonedinvestor, Sep 5, 2007.

  1. I hate being told the same thing over and over by misinformed people even when they are correct. The drumbeat of " september is historically the worst month for stocks... " by the talking heads on TV makes me want to take the other side. wasn't last sept pretty good?

    But there is so MUCH DIFFERENT and SPECIAL RIGHT now we have to just take a moment and talk about This september.

    This September we have the now highly-anticipated, yet mysterious, testimony to Congress on the war in Iraq. By law, the Bush administration needs to submit its report by September 15. General Petraeus' testimony will have to come at some point prior to that. I have been on record as saying that the overall psyche of the american investor hinges on optimism for troop withdrawal. This is special to This september!

    Excluding 1987, September is also the worst month in pre-election years and the only month with a negative average performance.

    Historically the Dow has been down September's first trading day three years running after a 7-year bull run. But once again This year is different the first trading day in sept also was the day after Labor Day, which has been up 11 of the last 13 years. Thus we were UP yesterday. Confusing.

    September has been known to close poorly. Remember that. It's the end of Q3 portfolio window dressing period. If the market has not rebounded by then, selling could climax toward month end. Rosh Hashanah comes early this year on the 13th. Stocks have tended to retreat from the beginning of the Jewish New Year through Yom Kippur. This also straddles the frequently treacherous Q3 triple witching!

    Monday of triple-witching week has been strong over the long haul. Friday has had three good years in a row, but the Dow has been down for the week as a whole six of the last eight years. READ volatile PERIOD: The week after has been abysmal, down 14 of the last 17 years. Owch.

    DATA POINT 1> NDX oscillator +93 (VERY OVERBOUGHT!)SPX oscillator +77 (OVERBOUGHT, as well!)

    DATA POINT 2> Gold is moving out and up.

    How did we all feel about yesterdays rally?
    My view is that Tech is so outperforming it's becoming a dangerous trade in a wy. All day the Nazdog was up and it dragged the other indices along... that tells me should we lose the oil and gas trade in the market it's lights out. there's not enough going on behind the scenes at the NYSE... Like the previous session, selling in the final thirty minutes of trading caused each of the major indices to give back about one-third of their intraday gains. HATE THAT! Total volume in the Nasdaq surged 20% higher yesterday, enabling the index to register a bullish "accumulation day." YEA BABY! In the NYSE, however, volume ticked 2% lower. Huh? Well let's chalk;k it all up to Home Depot if that had been up 5% insteaD OF DOWN the tape would of read up 150 or something and we wouldn't be debating the rally... or would we? Volume analysis anyone or how about a little Elliot Wave? I'll come back with that in Part 2.

    Turnover in both exchanges still remained below average levels. This tells us that institutional investors and professional traders apparently are not that anxious to jump back in the markets.

    DATA POINT 3> Market internals were solid. Advancing volume in the NYSE exceeded declining volume by a margin of 4 to 1. The Nasdaq ratio was positive by nearly 6 to 1. Both the S&P 500 and Dow Industrials closed right at critical tests of their 50-day MA resistance. If you remember we rallied off a 200 day and got trapped at the 50 if this was just to be a trading range I'd be fine with it but please lets be honest folks you know it's different this time all the financial failures and layoffs and housing it's not just a normal correction in a bull market... or is it? I've had days in which I look at the long term charts and just say wow it always manages to bounce off it 40 day average for... like... 7 years? It's incredible mechanism to be sure, this stock market but I get nervous when aspects of that very mechanism are called into question...

    A failure this week to move back above their 50-day MAs could lead to a substantial short-term pullback..... Our hope now is for BAD NEWS! But not too bad. Today the Fed Beige Book Report, which will outline economic conditions around the country as of the end of August... in other words, during the subprime crisis... we want some shock, enough to lower rates... but not too much. That could reverse this opening flush....

    As an investor we are relying on some weak cards... the job situation looks like it's about to go south in a big way... It's funny unlike stock market corrections... you really can see recessions forming in the distant mist like icebergs and despite your very best intentions you just can't turn the big boat away in time...

    Interesting times folks. Interesting times.~ stoney
  2. September's "reputation" likely means zilch. September's history was made over the years... mostly in the past when the Fed didn't have its hand up the market's ass on a daily basis like it does now.

    There is STRONG belief in "the Fed will jump in and fix everything" (in spite of the Fed's claims they're not going to bail out investor mistakes... when push comes to shove, we all know they will).
  3. Fed needs a little push from market to cut rate (i still doubt that fed will cut its rate); plus it is election year; it is good time to trash the market and watching politician's dog fight over the market is very amusing.

    Maybe Ben will be a escape goat for the downturn of the market; after no rate cut; you can't fix the unfixable.
  4. For the Fed to be cutting rates while the market is at all-time highs is fargin' RIDICULOUS!
  5. Just edited my post; :) wow; you are fast reply!
  6. Well if you got balls and an option account you might take a stab at the market here.

    Little known fact brought to you by stoney:
    U.S. Comptroller of the Currency Dugan says in congressional testimony national banks safe, sound .Dugan says banks have strong capital levels, stable liquidity, well-diversified businesses. Dugan says no indication of problems with leveraged loans held by banks

    Rally point 1.

    Beige Book Rally point 2.

    Bear trap complete. That's the rosy look.

    Well futures still pointing lower so it's definitely a contrary call but I've never seen such doom and gloom from our CNBC announcers. Mark said "This Market Sucks " this morning and Erin, are we all sick of her yet? Her demeanor today you would think we were down 3% it's 1%. Her sourpuss face of gloom and rolling eyes...are we going to have to watch her say " wow what a turnaround today! And high kick it with Kramer later? these guys are ridiculous.
    Back at 3:00!

  7. That would be good IF these national banks drove consumer spending. Problem is that regardless of how a bank looks, consumer is still tightening the reigns and over extended. It is fear and perception that are in control.
  8. The "driver of consumer spending", is (1) increase in wages.. which is not keeping pace with inflation, and (2) the ability to take on a higher level of indebtedness (mostly due to inflationary increases in home prices).... questionable now.

    Around the turn of the century, Bernard Baruch made the statement, "US consumers will spend everything they make plus their credit capacity"... are we near the exhaustion point of credit capacity?
  9. American consumers aren't as important anymore now that a lot sales come internationally
  10. Well here we go they started them a bit late it's a race to the finish but we are on the right side of the trade. double bottom and Poof we are bouncing. 2nd wave up now. opposite of yesterday perhaps buying into the close? 10 minutes left.
    #10     Sep 5, 2007