September, the Healthy Correction Month

#September #correction #stockmarket $FAANGs

$DIA $SPY $QQQ $RUTX $VXX

The S&P 500 index was on the verge of a correction, defined as a 10% decline from its all-time closing high, after ending 9.6% below its 2 September record Wednesday. The benchmark index then moved higher Thursday afternoon trade after seesawing during the session.

The tech-heavy NAS Comp confirmed a fassst correction earlier this month, and remained down more than 10% off its 2 September high Thursday.

The selloff occurred partially on fading hopes of further virus-related fiscal stimulus from Congress, but for the most part this is a purely technical move.

The action that we have seen this month makes me confident that this is a healthy correction in a strong Bull market.

During this September selloff, the focus has centered on mega tech and growth stocks that have driven the market off the 23 March lows.

The S&P 500 technology sector had fallen 12.8% from the market’s 2 September high as of Wednesday, while Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) each declined about 15% over that frame.

September marked a pause in stock market trends that have persisted for much of Y 2020. Without the performance of the mega tech sector, as well as Amazon and Netflix, the S&P 500 would have lost more than 9% of its market value as Wednesday, as opposed to a 0.5% gainer YTD.

Since the end of Y 2018, the S&P 500 is up 29% and FAANGs which we follow carefully here at HeffX-LTN: Facebook, Apple, Amazon, Microsoft and Google-parent Alphabet are responsible for 50% of that gain.

Sharp rises in valuation occur during early cycle recoveries and these are also being driven by the Fed’s easing programs, Wall Street loves ‘easy money’. So, alway take what the market gives, and do not fade the Fed.

P/E ratios will undoubtedly come down at some point, but as long as earnings start to recover soon they will not be at the expense of price.

Thursday, the US major stock market indexes finished at: DJIA +52.31 at 26805.44, NAS Comp +39.28 at 10672.29, S&P 500 +9.67 at 3246.59

Volume: Trade on the NYSE came in at 928-M/shares exchanged

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Bullish with a Very Bullish bias.

  • NAS Comp +18.9% YTD
  • S&P 500 +0.5% YTD
  • DJIA -6.0% YTD
  • Russell 2000 -13.0% YTD

Looking Ahead: Investors will receive Durable Goods Orders for August Friday.

Have a healthy weekend, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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