• Beware of September?

    by  • August 28, 2013 3:07 pm • Breaking News, Broad Market Analysis, Media Appearances, Quick Hits • 0 Comments

    I was on Fox Business yesterday with Larry Shover of SFG Alternatives, David Asman and Cheryl Casone were the hosts.

    It was a fun segment and I got to talk a lot, which is always nice.

    Here’s a summary of what we discussed.  You can watch the whole video here.

    Larry started it off noting how we are seeing very light volume and attendance, which is leading to everyone selling just about everything stock related.  He made a great point that it is more a buyers strike than massive selling.

    I was up next and noted that concerns out of Syria are a wildcard and could definitely push us lower if it spirals out of control.  None the less, on about a five-percent correction we’ve seen some big spikes up in fear.

    The AAII bears have been up six straight times (never happened before) and the Investors Intelligence poll shows those looking for a correction is over 35%.  This has only happened 28 times since 1980 and has been rather near-term bullish.  It all suggests we could have a surprise September rally.

     

    I then noted how everyone is getting fearful of the dreaded month of September. Historically, it is the worst month, but over the past 10 years it is actually up seven times and positive on average.

    Then looking at what the month of September does when we are up more than 10% YTD coming into it and the results once again say there is not a lot to fear.  Going back 20 years, there have been five times the SPX was up more than 10% going into September and the month was up four of them and up about 3% on average.

     

    Here and now there are a lot of similarities with what we saw back in May and the whole ‘Sell in May, go away’ thing that didn’t pan out.  A lot of fear based on bad info, then a surprise rally.

    Larry then touched on the bigger news at this point with the Fed is who will be in charge next year, not how much they taper.

    I finished up mentioning we still like financials and small caps here.  The small caps have big shorts and continued bearish puts trade on them, which could represent potential buying pressure.  One big positive to financials here is they are still way off their 2007 peak and the recent strength this year could have a long way to go.

     

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