June Weak, July Strong, August Weak…September?

We've made it past Labor Day, and here we are now, in the fall of the year - September 3rd.  Time flies when you're having fun, right, and this year has been fun.  As the title of today's post indicates, the market has flipped and flopped for the last 3 months - really since April, and so now, we have a new month.  Is the stock market going to flop back to the upside?  So far, the action of our short-term oscillators has called this transition pretty well, so let's look at where they are today.

As I mention (over and over and over), these are short-term oscillators.  For traders, they assume major emphasis, but that is not our bag, so we use them as a fine-tuning mechanism.  This tells us that if the infrastructure is right (Psychology, Monetary & Valuation), the stage is set for a meaningful rally and the bull market is intact.

We can see from the oscillators then that this year's outstanding gains have started to be a little more volatile in these last four months.  There have been two very overbought periods and two very oversold periods.  Each one has called the next few weeks' action.  If we go by that alone, we would be expecting that this month will once again create a new opposite trend and a positive gain for stocks.

Yet, we are still leaning to the cautious short-term side until we see some significant improvement in many of our Psychology indicators.

Don Hays

If you are a subscriber to HaysAdvisory.com, click here to read our recent reports.  If you would like to learn more about the research and commentary offered by Hays Advisory, click here.

Please see important disclosures at the bottom of this page.