September trading has officially started since we’re post the volatile Labor Day weekend! The summer trading season is over, so it’s time to take investors’ focus away from the beach and back onto the economy…
And back onto the bearish September stock market performance I expect to see this month.
On Tuesday morning, Goldman Sachs revised down the growth for the U.S. economy. They pointed to a “harder path” for the American consumer and took GDP estimates down to 5.7% from 6%.
That’s not a good sign.
I’m already bearish on September on the whole, and this just cemented the fact for me.
Let me show you why below…
Charts to Watch During This Bearish September Stock Market Performance
The Treasury Yield 10 Years (INDEXCBOE: TNX) is a chart I’ll be watching like a hawk this month.
I’ve been a bond bear since we made a low earlier in the summer, and I expect we could get a shocking move in rates to the upside. This, however, would upset the apple cart. I’m eyeing 1.5% on the TNX as a target for things to start moving.
I’m also paying special attention to the S&P 500.
I’m looking for a pullback on this chart to $4,300, which represents the 100-day moving average. That would be a 5% pullback and a bonafide hysterical crash by today’s standards.
But the chart is looking like it’s starting to downtrend, and I don’t expect the first support level of $4,400 to hold for very long.
Alongside those two charts, I’m also keeping an eye on a huge economic report that’s getting released this week.
The Beige Book — this report is published eight times per year and contains anecdotal data on current economic conditions — will be released on Wednesday at 2 p.m. EDT.
The Beige Book is particularly interesting these days because the Federal Reserve has to release the exact discussion that occurred in it’s last Federal Open Market Committee (FOMC) meeting.
With that, we’ll get a true gauge of how different Fed members feel about inflation and more clarity about what key metrics are being watched by the Fed.
After the latest meeting, the idea of a dovish Fed has been fully priced in… Perhaps the picture will become less clear after this release of information.
If you have any questions about my expectation for a bearish September stock market performance, or trading questions in general, make sure to email me at Jeff@joyofthetrade.com!
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