Technically Speaking – September

September 2, 2022

Markets pulled back in August, with the SP500 dropping below the 4000 level during the last few days of the month. We believed a rally was coming in July, which it did, and that carried over into August. However, towards the end of the month, we saw the markets react negatively to Fed Chair Powell’s comments about rate hikes. The Fed said it will continue to raise rates to curb inflation, with the consensus between 50 and 75 basis points. This news comes at the beginning of a seasonally bad time for the markets, with September historically being the worst month for stocks and October having a stigma since some of the worst market drops in history have happened during the month.

We still believe these dips create an opportunity to buy, or add to, quality stocks, which continue to show they can turn around quickly in a market rally. We reduced risk over 4300 looking for a pullback into September and October. Now we will look to add risk once the Fed shows its hand. Support is 3600 – 3700 and look for a rally above 4400 late 4th quarter into 1st half of 2023. The Fed’s decision this month on rate hikes will continue to be a focal point and if there are any surprises then the markets will likely react, positively or negatively. It is important to have a plan going forward so you can be confident in your allocation as we are likely to see market volatility continue.

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