E TalkMarkets Tuesday Talk: Fall Is Here, You Can See It In The Leaves And In The Markets

red panda, tree, branch, wildlife, wood, animal


Monday was the first day of Fall and the markets seemed to remind us that September is the worst month of the year for stocks on average. But remarkably, though there were sharp sell-offs throughout the day with markets ending lower, the Nasdaq recovered from it's mid-day low of -2.5% to close off just -.13% at 10,779, the Dow and the S&P 500 were down -1.8% and -1.2% respectively at 27,148 and 3,281. While concern over the worldwide resurgence of COVID-19, lack of a stimulus package from Congress, US-China relations (yes, that's a red panda in the picture) and rising partisan tensions over a Supreme Court nomination to replace Ruth Bader Ginsburg provided much of the backdrop for yesterday's continuing slide on Wall Street, stocks in Europe seem to be recovering somewhat today and US futures are currently flat: S&P +.14%, Dow -.10% and Nasdaq 100 +.52%. To put things in perspective below are the daily and yearly charts for the S&P and the Nasdaq:

Charts: The New York Times

A quick glance of the financial headlines finds some pundits saying we should look for the S&P to go to 3,100, the Dow to 26,000 and the Nasdaq to 10,000. Against this mis-en-scene, here's what's on the minds of a few TalkMarkets' contributors.

George Krum in Targets For The Week Of Sept. 21 has these remarks with regard to the S&P 500: " (Last week) we noted that for an up phase to take hold, the SPX needs to break above 3400. The SPX started the week by rallying but stalled at 3400, and after market breadth reached overbought levels on Wednesday, the sell-off resumed. As a result, the technical outlook (for this week) is negative, since both the weekly and the daily signals turned bearish, and market breadth needs a few more days to reach oversold levels. In summary, only support at 3300 stands in the way of lower prices, and only a break above 3400 will invalidate the bearish scenario.

Krum notes that, " both Goldman Sachs (GS) and JP Morgan (JPM) “see the SPX rallying to 3600 by year end”. In other words, they are betting on a resumption of the rally after the current sell-off ends, although it is not clear when and from what level they expect that to happen. Which begs the question: what is the purpose of giving upside targets without a corresponding downside target, and how to manage exposure, entry and exit levels, with just one price target? " Here is his chart which tries to do just that:

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William K. 1 year ago Member's comment

Certainly these are some tough times, with the fed bank not knowing what to do for the past few years, and yet doing it as fast as they can. And the markets being a bit down because of closures and also the folks dying from the plague going around. Since the market IS driven partly by emotions that is to be expected.

But the day after a solid cure becomes available or a good vaccine becomes commonly available for all, will be a day too late to buy because all of the stocks will take off.

David Marshall 1 year ago Contributor's comment

For sure, a vaccine and viable treatment therapy is what is needed.