Purely based on statistics, September and October are the two months that are generally bearish for stocks. For example, in the past 15 years, S&P opened strong early September in 11 years but mostly closed weak at the end of the month. One reason could be due to end-of-quarter mutual fund portfolio restructuring, for which they may have to sell positions in their portfolios. There are 2 potential risks in this September you need to be aware of:
- Sep 7: the day which may determine the fate of the Euro. The Germany's top court
will give its verdict on whether the government broke
the law with last year's bailouts of debt-stricken euro zone
countries -- if positive, this ruling could limit Berlin's room to manage the
region's debt crisis, which will be a significant blow to Euro. Although the chance of a positive ruling is small, it is not impossible.
- Sep 21 & 22: Fed will meet, which has been extended from one day to two. Many investors consider this as a sign that Benanake will likely introduce QE3, a new round of money printing to save the market. If this does not come as expected, the market may tank with disappointment.
Keep this in mind when assessing the market trend.
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