My previous post “Stock Market Seasonal Patterns” noted that US stocks have a seasonal bearish period from late August until at least early October. On September 21st, the S&P 500 (SPX) broke below Fibonacci support – a .236 retrace of the March to September rally. This break opens the door to the next support level .382 retrace of the March to September rally.
Also, the Russell 2000 (RUT) and Dow Jones Industrial Average (DJI) made new lows for their declines that began in early September. These moves confirmed the SPX lows and have eliminated prior bullish divergences vs. the SPX.
Additionally, the SPX crossed over into the territory of the June 8th high which had been illustrated as Minor wave “1”. The crossover has invalidated what had been the prime Elliott Wave count. There are several other alternate counts – more price action is needed before an updated Elliott Wave – prime count can be posted.
Currently the time dimension is dominating near term action. With a seasonally bearish time zone until at least early October – US stocks are vulnerable to additional downside action.
Long-term investors continue to hold all positions.
Short-term traders are flat. A new post with a low risk high reward trade opportunity will be issued as soon as evidence is discovered.
For now, late September 2020 in terms of American Football – the bears have the ball. Let’s, see what they can do.
On September 17th, a recommendation was made to buy Pfizer (PFE) on September 18th with a stop loss for half the position at 35.40 which was triggered on September 21st .
Using the opening PFE price on September 18th of 36.38 as the buy price, the total move to the stop loss is 3.8%, the loss for half the position is 1.9%. Continue holding the other half of the PFE position.
2 thoughts on “Stock Market Seasonal Patterns – Part Two”
Thanks for this most informative part II, Mark. Short-term investors may find the current situation a little rocky. Fortunately, I am a long-term investor so I am sleeping easy at night.
Thanks again, Mark, for sharing your wisdom and expertise with investors.