Good morning. Happy Monday. Hope you had a nice weekend.
The last day of Aug will start off on a down note. The Asian/Pacific markets closed mostly down with China dropping almost 7%. Europe is currently mostly down, but there are no losses greater than 2%. Futures here in the States indicator a decent gap down open. This comes off a week the market traded in a tight range without much conviction in either direction. Here’s the 7-day, 10-min chart. …
The S&P is up 41 for August…not bad considering the gains already achieved heading into the month and the tendency for the month to be weak. Here’s a chart which shows the average monthly gains of the Dow from 1950 – 2007 (blue) and 1980 – 2007 (gray). Things don’t get any easier now. Sept is by far the weakest month of the year.
But it would be irresponsible for me to not mention historical precedent has not held the last year. According to the graph above, Nov, Jan and Feb are all supposed to be strong months, but the market hasn’t followed the pattern lately.
Overall my bias remains to the upside. All the indexes are moving up together, and most key groups are moving up also. The most obvious warning is coming from China, so we’re going to see in the next couple weeks who leads, the US or China. See chart below. It’s not updated with today’s data; I indicated where it closed today.
Having an up bias doesn’t mean I’m aggressively going long. I’m still in conservative mode – especially with Sept being right around the corner. More after the open.
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