As we celebrate this Labor Day holiday and fire up the grill one more time, let's remember that September has traditionally been a leading indicator of "things to come" as portfolio managers clean house after returning home from their summer vacations.
This week’s activity in the markets has proven strikingly similar to previous years--the first few trading days in September have been historically bullish with the S&P being up 11 out of the last 14 years. These triple-digit moves are commonplace when there is major uncertainty--the key is to do what we always do---hedge our bets.
Trader’s Tip:
Historically,
• Fund managers, returning after the Labor Day holiday, tend to clean out their portfolios.
• September is the biggest percentage losing month for the S&P, Dow and NASDAQ.
• The S&P 500 tends to have a disappointing closing for the month because of mutual fund restructuring.
• September is a Triple-Witching month which is always dangerous especially the week after – terrible!
Key Dates:
• September 16th--options expiration for some indices.
• September 17th--options expiration for all equity and all other index options.
• October 14th--options expiration for some indices.
• October 15th--options expiration for all equity and all other index options
Market Outlook
Investors were upbeat about a report released last Friday that showed the U.S. service sector had grown for the 8th straight month (although its pace has slowed considerably). The service sector is the primary job creator for the US accounting for about 80% of the nation’s workforce-- so although it is a bit of good news, it’s also another indicator that the recovery has slowed considerably.
Consumers are keeping a tight lid on their spending habits as unemployment remains high. Employers have been reluctant to add back the millions of jobs lost in the downturn in an effort to keep costs low and profits high.
The unemployment rate has hovered above 9% for 16 straight months and will continue to remain high well into next year. At this rate, we should break the record for 19 straight months of +9% last seen back in the 1982-83 recession. Nearly 15 million people are unemployed and this will certainly put pressure on the 'powers that be' as we head into the mid-term November elections.
Even with the current depressed situation in the global economy, the stock market had its first winning week in more than a month thanks to the latest round of good news. Friday’s 128 point rally marked the 4th straight day of gains for the Dow and, for the moment, remains a noteworthy turnaround as compared to the dismal performance seen last month.
Even with the Labor Department’s report that private employers added 67,000 jobs last month, but it's still a far cry from what’s needed to revive the economy. The US needs to add 100,000 jobs per month to avoid slipping back into another recession--and around 150,000 to actually absorb all the new workers coming into the economy.
Another factor leading to this week’s rally was a sign that manufacturing is up both in the U.S. and China. But even with the 4-day rally, the index is still down 6.38% from the April 2010 high and economic growth is forecasted to be at less than 2% for the remainder of the year. So with that kind of anemic growth forecast how do we continue making outstanding returns--let's find out...
What are the Secrets of the Week?
We have two high odds Iron Condors this week: both on ETFs that take advantage of the neutrality in their market sectors--and BOTH with over 90% probabilities of success. Let's get started.
You can get in on this week's trades along with two new high-probability trades per week by clicking here now. www.cashflowheaven.com/ws
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