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September Opens Typically Weak and Closes Weaker


Although the month used to open strong, S&P 500 has
declined nine times in the last fifteen years on the first trading day. With
fund managers tending to sell underperforming positions ahead of the end of the
third quarter there have been some nasty selloffs near month-end over the

Recent substantial declines occurred following the terrorist
attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman
Brothers in 2008 (DJIA: –6.0%), U.S. debt ceiling debacle in 2011 (DJIA –6.0%)
and in 2022 (DJIA –8.8%).

Do not anticipate any major selloff and expect new highs
around yearend. But expect some sort of surprise to send stocks into another
mild correction before the Q4 rally ensues. Nobody wants to talk about it or
hear about it, but inflation appears to be done cooling. Further hints at
higher inflation will likely heat up the “higher-for-longer” chatter and weigh
on stocks.

Concerned that we are poised for a September surprise in the
financial sector. Would not be shocked if one of the rating agencies comes and announces a host of bank downgrades, perhaps starting at the top
with a big bank. They did warn us back in March during the banking scare and
most recently with the Fitch downgrade of the US credit rating.

Either way, expect any weakness to be temporary and for the
market to continue to track the seasonal and 4-year cycle patterns illustrated in
these charts as it has all year and since 2021.


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