ETF TRADING RESEARCH

Our September Stock Market Update In 3

Charts

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Hi, My name is Corey and I‘m with ETF Trading Research, today were

reviewing our recently published article…

Our September Stock Market Update In 3 Charts

A summer of low volume and lackluster trading has been replaced by a summer of fear. It almost feels like we’re in the

plot of every horror movie ever written…

You know how it goes… it starts out normal with everyone enjoying their lives and going about business as usual. But in the background there’s some sense of

foreboding.

Finally the villain or tormentor (in this case China) makes their appearance.

Then all hell breaks loose… everything is thrown into chaos and everyone is

everyone is running for lives.

And while you’re in the thick of the fear and chaos it’s hard to see how things will

play out. Who will be the next casualty? Who will

survive? How will it end? Here’s what we know…

Technical September Stock Market Update

The calm and boring summer of range bound trading was broken in an instant.

As you can see, the S&P 500 broke through the key technical support level

of the 200-day moving average on August 20th.

The S&P 500 dropped more than 14% from the recent highs. Then the large

cap index promptly rebound more than 10%. Obviously, that makes perfect

sense (yes, that’s sarcasm). And the selloff hit all sectors of the

market.

As you can see, there was no place for investors to hide from this pullback.

Fundamental September Stock Market Update

The primary cause of the selloff was China. As we’ve talked about many times

before, economic growth in China has been slowing for years. Their latest

attempts to prop up economic growth built up a stock market bubble.

The air began to come out of the stock market bubble in June. Chinese stocks are now 40% below their peak of just a

few months ago.

The Chinese government openly admitted they were buying stocks to try to stem the tide of selling. Then China devalued their currency in a surprise

move in the week before the US market selloff.

Needless to say, these aren’t normal things for the government to be doing. All of the crazy stuff China was doing

caused a lot of investors to believe that another shoe was about to drop.

As a result there wasn’t anyone that wanted to buy stocks on the morning of August 24th, 2015 as the market opened.

And the market rout was on…

It’s hard to say, where we go from here.

China, oil prices, earnings, and the uncertainty of the first Fed rate hike are

weighing on investors. Fear and pessimism are dominating investor

decisions these days.

At the same time US economic data is solid with pockets of strength that point

to faster economic growth and better days ahead for consumers.

Key Takeaway From September Stock Market Update

One thing’s for sure, the relative calm of the range bound S&P 500 has ended.

If these fears and negative sentiment are proven to be unfounded it could be just

the thing to spark the next big move higher for US stocks.

However, it’s too soon to say that the S&P 500 has found a bottom.

Don’t forget that investors are still focused on the many shortcomings of

the market like - falling oil prices, slowing growth in China,

strong US Dollar, sluggish corporate investment, and the timing of the first US

interest rate hike in nearly a decade.

Use this time to build a list of stock you want to own. And when the time is right

be ready to pounce on these stocks.

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