Volatility Strikes Again: Tech Stocks Lead a Market Rally Despite Early September Slumps

𝐕𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲 𝐒𝐭𝐫𝐢𝐤𝐞𝐬 𝐀𝐠𝐚𝐢𝐧: 𝐓𝐞𝐜𝐡 𝐒𝐭𝐨𝐜𝐤𝐬 𝐋𝐞𝐚𝐝 𝐚 𝐌𝐚𝐫𝐤𝐞𝐭 𝐑𝐚𝐥𝐥𝐲 𝐃𝐞𝐬𝐩𝐢𝐭𝐞 𝐄𝐚𝐫𝐥𝐲 𝐒𝐞𝐩𝐭𝐞𝐦𝐛𝐞𝐫 𝐒𝐥𝐮𝐦𝐩𝐬 𝐓𝐡𝐞 𝐦𝐚𝐣𝐨𝐫 𝐔.𝐒. 𝐬𝐭𝐨𝐜𝐤 𝐢𝐧𝐝𝐞𝐱𝐞𝐬 𝐫𝐚𝐥𝐥𝐢𝐞𝐝 𝐥𝐚𝐬𝐭 𝐰𝐞𝐞𝐤, 𝐩𝐨𝐬𝐭𝐢𝐧𝐠 𝐰𝐞𝐞𝐤𝐥𝐲 𝐠𝐚𝐢𝐧𝐬 𝐫𝐚𝐧𝐠𝐢𝐧𝐠 𝐟𝐫𝐨𝐦 𝐚𝐫𝐨𝐮𝐧𝐝 𝟑% 𝐭𝐨 𝟔% 𝐭𝐡𝐚𝐭 𝐰𝐞𝐫𝐞 𝐧𝐞𝐚𝐫𝐥𝐲 𝐞𝐪𝐮𝐚𝐥 𝐢𝐧 𝐦𝐚𝐠𝐧𝐢𝐭𝐮𝐝𝐞 𝐭𝐨 𝐭𝐡𝐞 𝐩𝐫𝐞𝐯𝐢𝐨𝐮𝐬 𝐰𝐞𝐞𝐤’𝐬 𝐬𝐭𝐞𝐞𝐩 𝐥𝐨𝐬𝐬𝐞𝐬. Much of

September’s volatility has been driven by the information technology sector, which dropped 7% to start the month before gaining back 7% in the latest week. Market swings have increased in recent weeks, as anxiety of a slowing economy and persistent inflation is sparking pullbacks. But a broader view shows that despite sell-offs, stocks have delivered very strong gains and sit near record highs.

On August 5, the Dow fell 1,034 points. 𝐈𝐭 𝐭𝐡𝐞𝐧 𝐫𝐨𝐬𝐞 𝟏,𝟎𝟔𝟐 𝐩𝐨𝐢𝐧𝐭𝐬 𝐨𝐯𝐞𝐫 𝐭𝐡𝐞 𝐧𝐞𝐱𝐭 𝐬𝐢𝐱 𝐝𝐚𝐲𝐬.

Almost another 2,000 points were added over the ensuing few weeks, followed by a drop of 1,000 points from August 29 to September 6. Then on Wednesday of last week, the Dow had an intraday swing of 910 points (rising by that amount in a matter of a few hours).

𝐓𝐡𝐞 𝐩𝐨𝐢𝐧𝐭 𝐢𝐬 𝐭𝐡𝐚𝐭 𝐚 𝐜𝐥𝐨𝐬𝐞𝐫 𝐥𝐨𝐨𝐤 𝐚𝐭 𝐫𝐞𝐜𝐞𝐧𝐭 𝐦𝐚𝐫𝐤𝐞𝐭 𝐯𝐨𝐥𝐚𝐭𝐢𝐥𝐢𝐭𝐲 𝐦𝐚𝐲 𝐟𝐞𝐞𝐥 𝐚 𝐛𝐢𝐭 𝐧𝐚𝐮𝐬𝐞𝐚𝐭𝐢𝐧𝐠. Specifically, the early-August sell-off was sparked by a jobs report showing a slowdown in hiring growth that spurred a chorus of recession calls. The late-August decline was a similar reaction to a weak monthly manufacturing report. And last Wednesday’s half-day slump was the response to the consumer price index (CPI) report that showed a stall in the pace of falling inflation.

Despite the fact that markets have displayed a bit more anxiousness of late, that shouldn’t be interpreted as a sign the bull market has run out of gas. It’s actually been encouraging to see that episodes of rising recession fears have not caused much market downside follow-through.

𝐀𝐥𝐭𝐡𝐨𝐮𝐠𝐡 𝐭𝐡𝐞 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 𝐡𝐚𝐯𝐞 𝐥𝐨𝐠𝐠𝐞𝐝 𝐬𝐭𝐫𝐨𝐧𝐠 𝐠𝐚𝐢𝐧𝐬 𝐨𝐯𝐞𝐫 𝐭𝐡𝐞 𝐥𝐚𝐬𝐭 𝐭𝐰𝐨 𝐲𝐞𝐚𝐫𝐬 𝐚𝐧𝐝 𝐜𝐮𝐫𝐫𝐞𝐧𝐭𝐥𝐲 𝐬𝐢𝐭 𝐰𝐢𝐭𝐡𝐢𝐧 𝐬𝐡𝐨𝐮𝐭𝐢𝐧𝐠 𝐝𝐢𝐬𝐭𝐚𝐧𝐜𝐞 𝐨𝐟 𝐭𝐡𝐞𝐢𝐫 𝐚𝐥𝐥-𝐭𝐢𝐦𝐞 𝐡𝐢𝐠𝐡𝐬, 𝐭𝐡𝐞 𝐦𝐚𝐣𝐨𝐫 𝐢𝐧𝐝𝐢𝐜𝐞𝐬 𝐧𝐨𝐰 𝐚𝐫𝐞 𝐩𝐨𝐢𝐬𝐞𝐝 𝐚𝐭 𝐨𝐫 𝐧𝐞𝐚𝐫 𝐩𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐟𝐨𝐫𝐦𝐢𝐝𝐚𝐛𝐥𝐞 𝐨𝐯𝐞𝐫𝐡𝐞𝐚𝐝 𝐭𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥 𝐫𝐞𝐬𝐢𝐬𝐭𝐚𝐧𝐜𝐞.

The next few days could be critical in assessing whether or not they can extend and possibly spike up here or back off to test lower support In any case, closely monitor the technicals and “Trade What You See, Not What You Think”.

𝐇𝐚𝐫𝐫𝐲 𝐁𝐨𝐱𝐞𝐫, 𝐀𝐮𝐭𝐡𝐨𝐫

𝐕𝐞𝐭𝐞𝐫𝐚𝐧 𝐓𝐫𝐚𝐝𝐞𝐫, 𝐄𝐱𝐩𝐞𝐫𝐭 𝐓𝐞𝐜𝐡𝐧𝐢𝐜𝐚𝐥 𝐌𝐚𝐫𝐤𝐞𝐭 𝐀𝐧𝐚𝐥𝐲𝐬𝐭 & 𝐅𝐨𝐮𝐧𝐝𝐞𝐫 𝐨𝐟 𝐓𝐡𝐞𝐓𝐞𝐜𝐡𝐓𝐫𝐚𝐝𝐞𝐫.𝐜𝐨𝐦