Why Might September Exceed Expectations?

Last week’s market rebound stalled on Friday but the major averages recorded solid weekly gains. The gains last week reduced the monthly losses for the major averages, but the S&P 500 was still down 1.8%. However, the S&P did considerably better than the 2.6% decline in the Nasdaq Composite.

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Tom Aspray-ViperReport.com

Recapping the week both the Dow Jones Industrial Average and the Nasdaq 100 were up over 3%. There was a solid 2.79% gain in the S&P 500 and even the battered Russell 2000 Small Cap Index was up 2.42%. The Dow Jones Utility Average had another strong month and is now up 18.6% YTD. It was a very positive sign that after two consecutive weeks of negative NYSE advance/decline data, the A/D ratio last week was better than 2-1 positive.

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Tom Aspray-ViperReport.com

As I pointed out last week there were a number of technical indicators that needed positive action to avoid the generation of sell signals. The NYSE All A/D Line had held well above support during the Tweet induced market decline and closed last week at a new all-time high.

In my advance/decline analysis I have often pointed out that the A/D lines can lead prices higher. That was the case in early February as the weekly Nasdaq 100 A/D line made a new high but the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100, was at $167.88. This was well below the all-time high of $186.24 which was surpassed in the latter part of April.

A week ago, the weekly NYSE Stocks Only A/D Line dropped below its 21 period EMA which was clearly a reason for concern. It was able to hold above the stronger support at line c. The strong market internals last week have moved the A/D line back above its WMAs which is a positive sign.

Even though many analysts are focusing on the historically weak performance of stocks in September, the positive daily and weekly advance/decline analysis suggests that stocks may do better than most expect.

An important positive development was the low level of trade-focused Tweets during the week which helped calm the markets. It was noted early last week by respected market expert Art Cashin that traders are hoping that President Trump has finally received the message that his Tweets can adversely impact the stock market.

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