Hey y’all,
Summer has come and passed. And a roaring bull market can never last.
It’s officially September, and if you’re a seasonality fatalist, that means this is the worst month of the year for investors. The data isn’t pretty:
That blood-red column #9 there? September. The month we’re in right now.
And, unfortunately, as I write this shortly after the open, it looks like the month is off to a typically Septembrian start, with all three major indexes plus crude oil and gold down significantly (oil is taking the worst of it right now).
You will read headlines explaining this:
Stocks retreat as huge jobs report looms…
Stormy September lies in wait for markets everywhere…
Short sellers ride the AI stocks hype wave…
But there’s no one simple explanation or cause. At its root, the stock market is a war between buyers and sellers, and right now, more people want to sell than buy.
Does that guarantee September is going to be a trainwreck? Of course not. It’s way too soon to tell.
But there is certainly the risk of a snowball effect, especially with all of the potential “black swans” in the coming weeks — rate cuts, and election… global unrest…
It’s all feeling a bit gloomy. So it’s no wonder investors are a little scared.
But there are several things that could change the momentum pretty quickly. Big stock market news events are coming fast and heavy this month and any one of them could spark a surge of upward momentum.
Here are some key September dates to put on your calendar:
- Friday, September 6th: U.S. Employment Report, plus TWO Fed members speak
- Wednesday, September 11th: Core CPI reports at 8:30 AM
- Thursday, September 12th: Core PPI reports at 8:30 AM
- September 17th and 18th: The Federal Reserve meeting (and, potentially, interest rate cuts)
All roads lead to those Fed dates in the middle of the month. But there’s a bit of a Catch-22.
There are essentially three possible outcomes from the Fed meeting this month:
- NO rate cut
- A 0.25% rate cut
- A 0.50%+ rate cut
Of those scenarios, it would seem that only NO rate cut could have a negative impact on the market.
But I’m concerned that a 0.25% rate cut is already “priced in” with the markets where they are right now.
What that would mean is essentially this:
- If the Fed doesn’t cut rates, the disappointment and fear could spark a major selloff that tests recent lows and even breaks them
- If the Fed cuts rates just 0.25%, the market either doesn’t react (stays flat) or reacts with disappointment and moves a little lower, anyway
- Only if the Fed cuts rates by 0.50% or more, which is the unlikeliest scenario, do we see the markets shoot higher
It’s too soon to know for sure, but that’s where my “finger in the wind” tells me we’re headed right now.
And what does all that means?
It simply means to be careful with your trading this month. Know when key dates are coming and plan around them.
Play smart by limiting your risk and, when possible, extending your trades (give yourself more time to be right).
We talked in our last issue about how powerful credit spreads can be right now.
Just be smart with your trades. Take wins. Cut losses. All the stuff that makes traders successful in any environment.
September could be a rough month… or it could see a pretty massive turnaround when the Fed meeting comes. It’s too early to tell.
So keep your head down and keep plugging away.
To your prosperity,
— Stephen Ground
Editor in Chief, ProsperityPub
P.S.: If you want a real Pro’s forecast for Q4, you need to check out Graham Lindman’s insights here! He’s covering the REAL state of the economy, what the Fed is up to, and more!
