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Trends & Analysis
News
Costco’s shares slide despite upbeat results
News
US stocks decline after Fed lifts rate by 75bps
News
Can Walmart protect you from the September swoon?
News
Ford shares hit speed-breaker amid supply concerns
News
Could Microsoft excel?
News
Crude oil burns brighter amid supply concerns

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Asset Watch

Is the S&P 500 poised for another winning week?

 

Tuesday, September 13 2022

The bulls put up a valiant effort, rallying the S&P 500 off its Sep. 6 lows, giving momentum to its three straight days of gains. Optimists are back in control on Wall Street thanks to the index recouping its 50-day moving average on Sep. 9. However, with a tricky seasonal period approaching, should you sell the S&P 500 at the end of the week?

 

The U.S. equity benchmark has formed a triangle pattern of lower highs and higher lows. After reaching the lower trendline on Sep. 6, buyers emerged and the S&P 500 reversed course. Therefore, with a roughly 4.7% upside, until the index hits the upper trendline, range-bound price action still offers a profitable trading opportunity.

While the good times may last for another week or so, seasonality shows that the S&P 500 often peaks in mid-September before declining sharply into the end of the month. Likewise, the U.S. mid-term elections occur in November. Bank of America found that September is the S&P 500’s worst month, with an average decline of 1.14%. Additionally, 47.8% of historical Septembers were positive, which is the second lowest, only behind June’s 43.5%.

As a result, while the technical backdrop is short-term bullish, the risk of a reversal increases substantially after this week. So, should you play it safe and exit early, or hold the line and fade the seasonal blues?


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