About That Negative Seasonality Thing...

By now, everyone probably knows that September tends to be "the cruelest month." Since 1928, history shows that September's return is by far the worst of the year, with the month averaging a loss of -1.1%. And the odds of a decline during September are also strong since the month has seen losses 56% of the time (39 have been up, 49 down).

It is also worth noting that our cycle composite (which combines the 1-year seasonal, 4-year Presidential, and 10-year decennial cycles) continues to suggest that a corrective phase should be in effect until mid-October. So, what has Ms. Market decided to do in the face of all this? Make new all-time highs, of course!

In my opinion, the key drivers to the current seasonal divergence is (a) a universal "sigh of relief" in response to the debt ceiling being "handled" (for now), (b) Irma's impact being less than expected, and (c) tensions with North Korea being walked back a bit. In response, traders appear to have covered shorts, fund managers are putting money to work, and everybody looks to be "buying the dip."

Another historical tidbit that my friend Paul Schatz discovered is that the September swoon tends to depend on whether or not the market has been strong as the month began. In a recent blog, Paul notes that when the S&P 500 begins the month above its long-term moving average (150-day simple), September's average decline of -1.1% turns into a gain of +0.5%.

I also find it interesting that the recent pullback seen in mid-August (which measured -2.2% on the S&P 500) would be the second shallowest decline seen in the second half of calendar years since 1980. In fact, per Ned Davis Research, over the last 37 years, the smallest correction seen between August ...

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The Daily Decision for 9.18.17

TODAY'S PORTFOLIO REVIEW:

LEADERS Model: The LEADERS model currently holds positions in the Technology, Financial, and Industrial sectors. As for performance, we continue to be pleased as the LEADERS model is up +13.7% ytd compared to 11.5% for S&P 500. ...

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The Most Bullish Thing A Market Can Do Is...

Good Monday morning and welcome back. It's a new week, so let's start things off with an objective review of my key market models/indicators and see where we stand. To review, the primary goal of this exercise is to try ...

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Bulls Get Benefit of Doubt, But...

It's a new week, so let's start things off right with an objective review of my key market models/indicators and see where things stand. To review, the primary goal of this exercise is to try and remove any subjective notions ...

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Enter the Cruelest Month

Geopolitics are back in focus on this first trading day of September. North Korea's push forward with another test on the nuclear front over the weekend caused U.S. Ambassador Nikki Haley to suggest that Kim Jong Un is "begging for ...

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Riding The Range Until...

It is a safe bet that our furry friends in the bear camp figured the combination of Hurricane Harvey and increasing tensions with North Korea would get the party going to the downside. However, a funny thing happened on the ...

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If History Is Our Guide, Harvey Will Cause Stocks To...

Word is that Hurricane Harvey will end up being the most expensive natural disaster in U.S. history. According to AccuWeather, the estimate for the full cost of the storm will approach $160 billion. To put this number in perspective, Harvey ...

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The Daily Decision for 8.29.17


The Early Take on the Market:
Please accept my apologies for the tardiness of this week's report. We had traveled to Chicagoland for family gatherings over the weekend and I awoke Monday morning to no internet where we were staying. ...

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Indicators Suggest Some Caution Still Warranted

Please accept my apologies for the tardiness of this week's report. We had traveled to Chicagoland for family gatherings over the weekend and I awoke Monday morning to no internet where we were staying. And while the trek home was ...

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The Daily Decision for 8.25.17


The Early Take on the Market:
Make no mistake about it; all eyes will be on Jackson Hole this morning where both Janet Yellen and Mario Draghi are slated to speak. The key here is that Fed Chairs have made ...

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Looking To The Weight Of The Evidence

Stocks pulled back a bit yesterday in response to Donald Trump's threat to shut down the government if he didn't get his border wall. On this topic, it is important to note that (a) the government is slated to run ...

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One Of The Best Ways to Manage Risk Is...

Although stocks rebounded nicely Tuesday and the major indices appeared to regain their footing, we need to keep in mind that the August/September time frame tends to be tough sledding in the stock market. And with approximately 40% of the ...

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