September 1, 2021
Good morning,
Hello September – What! How is that even possible? Time is just flying. There are four months to go until year-end, and now bulls feel emboldened while bears are hushed. The S&P 500 posts a record every four days (Bloomberg), while each uncertainty the market faces turns out to be a buy-the-dip moment. The balance of evidence from The Tape remains positive.
The S&P 500 closed its seventh straight monthly rally yesterday, the Index was up 3.04% for August. The continuation of the rally would seem to depend on the Fed’s Taper plan, the infection rate of the coronavirus and the strength of the next variant, and geopolitics. Bulls believe these concerns are the wall of worry for the market to climb over – history is on their side. In the 18 other times the market has rallied 7 straight months since 1929, stocks jumped 10.2% on average 12 months out (Bloomberg). The figures were positive in each of the past six cases; the rare declines reached double digits only twice and in neither of those two instances were interest rates nearly as low as they are now (TINA).
Now we come to September. It has had the worst performance of all months, with an average loss of 0.8%. Having just enjoyed 18 months of one of the strongest bull markets ever, with no significant corrections – if we have just an average September, it’s going to feel catastrophic to investors, but the feel won’t be real.
See you Friday with the jobs number.
Be well,
Mike