Stock Market Outlook for September 4, 2024
The intermediate-term trend of the market is under threat as the Technology sector rolls over below the July highs, confirming the shift of the prevailing rising trend.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Ametek, Inc. (NYSE:AME) Seasonal Chart
iShares Equal Weight Banc & Lifeco ETF (TSE:CEW.TO) Seasonal Chart
Invesco High Yield Equity Dividend Achievers ETF (NASD:PEY) Seasonal Chart
Distillate U.S. Fundamental Stability & Value ETF (AMEX:DSTL) Seasonal Chart
The Markets
Stocks sold off sharply on Tuesday, showing the type of volatility that the month of September is known for. The S&P 500 Index fell by 2.12%, turning lower from implied resistance between 5622 and 5658, representing the July 17th downside gap. A short-term peak has become confirmed as the bulls show their reluctance adding to risk at current heights and now we have to scrutinize the risk that the intermediate-term double-top pattern is showing. The chart setup sets the stage for the declines that are normal for stocks during the month of September, a framework that would be confirmed by a breakdown back below support at 20 and 50-week moving averages around 5500. MACD and RSI can be seen rolling over, revealing a negative divergence versus price that highlights the waning of buying demand heading into the traditionally weak month for equity market performance in September. The first week (and first half) of September is typically not the period to be concerned of, but rather the back half is when the bulk of the volatility/weakness sets in. If Tuesday’s price performance is just the start of September’s weakness, we could be in store for a treacherous month ahead. Caution in risk assets remains appropriate, particularly while within this period of seasonal volatility and while the fundamental backdrop appears uncertain.
Today, in our Market Outlook to subscribers, we discuss the following:
- The rollover of the Technology sector during its weakest month of the year
- The bounce in the US Dollar Index from significant horizontal support
- The change we are making in the Super Simple Seasonal Portfolio
- Our weekly chart books update, along with the list of all segments of the market to either Accumulate or Avoid
- Other Notes
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- Commodities
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Sentiment 0n Tuesday, as gauged by the put-call ratio, ended bullish at 0.79.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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