It’s Labor Day, the unofficial end of summer and the official start of school.  College football kicks off and the NFL start is just around the corner.  It’s time for everyone to get serious and get back to work.

The Big Picture 

That includes most of Wall Street, seemingly on vacation for the past two weeks.  In their absence, the major market averages, while down for the week, managed to string together three consecutive winning months.  For the year the Dow is up 7.1%, the S&P higher by 11.8% and the NASDAQ, powered by technology, is 17.7% better than at the start of the year. 

The Republican National Convention in Tampa, Florida and the Federal Reserve’s annual meeting at Jackson Hole, Wyoming are behind us.  Ahead this week the Democratic National Convention in Charlotte, North Carolina and the European Central Bank meeting in Frankfurt, Germany.  Our central bank, the Federal Reserve, is willing to ease monetary policy further in the face of “painfully slow” growth in the labor market.   

As the calendar would have it, this week starts with Labor Day and ends with the August Employment Situation Report, by far the most important piece of data for the market as well as for the November elections.  With a weak job market, declining union membership and assaults on public workers – from Scott Walker to Scranton, Pennsylvania and San Bernardino, California – we may need to rename this holiday to more aptly reflect the sentiment.    Send me your suggestions at 

I, Investor 

September can be quite a volatile month and is seen by most as the worst month for stocks.  Just think back to September, 2008 when we were in the throes of a global financial meltdown triggered by the collapse of Lehman Brothers; the sell-off after the attacks of 9/11 or the capitulation selling that climaxed in September of 2002. 

End-of-quarter money manager positioning, end-of-fiscal year for mutual funds and historical “mind set” are just some of the reasons The Stock Traders Almanac wrote “September is when leaves and stocks tend to fall; On Wall Street it’s the worst month of all.” 

But, coming off a strong three-month run, it will take more than posturing and poetry to halt the charge of the bulls.  Six out of the past eight years saw September end in the plus column on the heels of August gains.  Technical indicators are lining up on the bullish side as well.   

The S&P 500 is poised to test five-month and four-year highs of 1425.  If the Dow Jones Industrial Average can successfully vault the April highs of 13, 275 a challenge of the late 2007 could be mounted.  The NASDAQ, the best performer of the three major indices, has already rallied 164% off of its July 2002 lows.  If it can break through resistance at the late March highs of 3091, it would be only 38% away from its all time high of 5048 reached at the height of the internet bubble, March 10, 2000.   

That is, if the fundamentals align.  While this week is dominated by the unemployment report, construction spending, vehicle sales and second quarter productivity data are scheduled for release as well. 

The week of September 10th kicks off with July consumer credit and international trade numbers but is dominated by a two-day Federal Reserve Open Market Committee meeting.   Another round of quantitative easing is widely expected if the unemployment picture deteriorates and retail sales and inflation pressures remain weak. 

Oh, did I mention it’s a presidential election year?  Welcome back to work.


Speak Your Mind