Seasonal:
Bearish. 1950, September is the worst performing month of the year for DJIA, S&P 500, and NASDAQ (since 1971). In pre-election years, rankings are unchanged while average losses expand.
Psychological:
Fading. According to Investor’s Intelligence Advisors Sentiment survey, bulls are at 44.9%. Correction advisors are at 36.4% and Bearish advisors are 18.7%. The drop in bullish sentiment and the increase in correction/bearish advisors are near levels observed at the end of May. Overall, the decline in bullish sentiment has corresponded with the decline and choppy trading of recent, but it has yet to slip to levels often seen near significant market bottoms.
Fundamental:
Sketchy. Q2 GDP was revised lower to 2.0%. Trade tensions between U.S. and China continue to spiral with each new escalation bringing only more uncertainty. Yield curve inversions abound stoking recession fears that just drive rates lower. Some bright spots exist. Unemployment is low and the economy is still growing just at a slower pace.
Technical:
Range bound? Since early August DJIA, S&P 500 and NASDAQ have essentially been trading between their respective 50- and 200-day moving averages. Support has held, but overhead resistance has also held. Trade and/or the Fed are likely to be the catalyst that pushes the market through one barrier or the other.
Monetary:
2.00-2.25%. It would appear that the Fed is still behind the curve. Yields across the duration spectrum have plunged. Multiple central banks have cuts rates while the Fed ponders and remains data dependent. If the Fed waits for the data, it could be too late to avoid further slowing and possibly a recession.
SEP
2019