It’s the first Monday in October and that means it’s time to talk monthly statistics. Which are actually super interesting if you’re a stats nerd like me. But even if you’re not you should take heed as there are many misconceptions about this months floating around out there. So let me try to set the record straight, and I’ve brought plenty of exhibits to back up my bold claims.
For the past four sessions equities happily floated along in cruise control, fully in line with an anticipated positive close as suggested by the seasonal statistics for week #40 (see my Monday post). However as it is 2020 A.D., and per my rather prescient post on Wednesday, we should have been prepared for the proverbial spanner to once again be thrown into the flaming political train wreck already hurdling toward us.
Had I read a book last year depicting the events of 2020 up to date I would have probably laughed out loud and insisted that such a scenario was safely in the domain of conspiracy theorists. As this is not a political blog I prefer to keep pertinent opinions to myself and this post will be no exception. Rather it serves as an avid reminder that dramatic events or situations we consider to be ‘impossible’ or ‘unrealistic’ seem to be occurring much more frequently than probability theory would suggest.
Last Friday I warned my subs to not yield to the bearish exuberance peddled across the financial MSM and to instead consider exploratory positions in select tech related symbols. Like the rest of you I don’t have a crystal ball. But what I do have is access to over half a century of statistical data which strongly suggested that week #40 had good odds for a short squeeze. At least judging by the overnight session a first attempt to bang the open into a gap appears to be in the works.
The Brotherhood Of Organized Market Megalomaniacs (BOOMM) has informed me that I have not been acting sufficiently nefarious as of late. Well that all ends today as market conditions have finally opened a door to claiming my well deserved share of ill-gotten gains. In somewhat related news I am currently looking for a small number of well trained minions willing to do my egregious bidding.
I’m aware that I may be eating my words in the not so distant future but alas: I just took a gander at my market momentum charts and none of them are even close to bearish territory, quite on the contrary. In fact what I’m seeing at the current time is simply the natural process of correcting a market that got a wee bit ahead of itself in late August.
Welcome to the worst trading week of the year, at least historically speaking. I looked very hard but there really isn’t much good to say about week #39, which incidentally also marks the beginning of the fall season (starting tomorrow). At the same time however volatility (of the realized kind) is much subdued this week – in fact it’s the least volatile in all of September.
Once again the week started out with an attempt to ignore seasonal bias but then slowly degraded as time went on. Let’s be clear, the bulls had a perfect shot at recovering the ball and controlling the game again but then fumbled only yards from the end zone. Looking at the overall market it’s easy to assume we’re only looking at second dip buying opportunity but if we did a bit deeper things are looking a lot less optimistic.
The E-Mini futures have been advancing higher in the pre-session and we are now approaching the crucial inflection point I have been highlighting for the past few sessions. It’s probably no exaggeration to say that what happens today will most likely affect the remainder of this month going all the way into the presidential elections.
Navigating this week is going to take some finesse as the market is giving us more conflicting signals than a teenage girl on her first date. First up the main key to survival and – better yet – prospering in high volatility market environments is to not attempting to find order where there is chaos, to not fill in a gaping chasm of confusion with your own personal opinion. If you have the mental discipline to do that then – congrats, you’re already way ahead of over 90% of all market participants.