September 30, 2022
Good morning,
Lore: a body of traditions and knowledge on a subject. Outside the possibility of a few hours of unprecedented market behavior today (futures are flat, btw), market lore may have gotten it too right this month. The S&P 500 Index is down -7.83% entering this final day of September.
I suspect that the market being ripe for another bear market rally mentioned in Wednesday’s Morning Note and the market’s +2% jump up on the day were unrelated. Wednesday’s equity market move was likely driven by some extraordinary moves in the global bond and currency markets. This hypothesis was largely confirmed yesterday as equities gave back all of Wednesday’s gains – Wednesday was just a one-day wonder and shouldn’t have much of a role in the longer-term equity market narrative.
Speaking of market lore – another tidbit that’s very applicable to this week’s market behavior: the strongest rallies and sell-off’s (ones lasting more than a day) begin without an obvious catalyst. They just seem to materialize one day, and momentum grows in the following days.
So, we’ll just have to wait for now. Thankfully, September will be over on Monday morning – see you then. Have a nice weekend.
Be well,
Mike