by Jason Bodner
September 12, 2023
September is historically a rough time for many reasons. I write this just ahead of 9/11, perhaps one of the roughest times in American history. The 2001 tragedy claimed the lives of nearly 3,000 people – 400 of whom were firefighters and police officers. Naturally we always think of these victims first, but it could have been orders of magnitude worse. On any given normal business day, as many as 50,000 people worked in the twin towers. I know, because I worked there in the summer of 2001. An additional 40,000 people pass through each day. Any loss of life is tragic, but thank goodness it didn’t turn out far worse.
Remembering those tragically injured and killed that day 22 years ago – hundreds of them my associates at Cantor Fitzgerald, where I trained that summer – helps keep any stock market volatility in perspective.
Daily market swings can be uncomfortable, anxiety-producing, and unpleasant, but any market disturbance is insignificant in the grand scheme of things. I believe this September, barring anything as unforeseen as 9/11, will go down in stock market history as just an average September, which according to history dating back to 1990, offers us an expected drop of just -0.8% on the S&P 500 index:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
But there are some interesting follow-ups to these averages:
1) Septembers may be negative on average, but since 1990 we have seen an even split of 16 positive, and 16 negative, Septembers. A 50/50 shot is hardly a measure of consistency. This means it’s entirely possible we will end up with a positive September based on historic data that suggests it’s a coin flip.
2) October through December, by contrast, is much more reliable. It turns out that we have a 75% chance that November and December will deliver a positive performance:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
If you read me regularly, I’m not telling you anything new. Being a data scientist can mean that I can be incredibly boring and repetitive at times. I guess I’m also not telling you anything new there, either. It can be boring or even annoying to read the same thing over and over. But the data is the data. That’s why I love it – there’s no room for emotional attachments. I just analyze and create a framework for forecast.
With that prologue, let’s look at what last week’s data showed us. While the close of August saw a meaningful uptick in both unusual buying and market prices, the first week of September showed us a renewed dose of red. Markets slumped and unusually large signals spiked. This sudden selling further weighs on the Big Money Index (BMI). As I explained last week, the BMI is a 25-day moving average of unusual buys and sells, netted out. July was full of green (buying), but as those green days roll off the data set for the BMI calculation, remaining and new sells continue to pressure the BMI lower:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
It’s not entirely all bad news. The price action we saw last week was congruent with an ongoing rotation. Below we see the individual sectors in terms of unusual buying and selling.
What stands out to me is where the buying and selling was taking place. In short, money flowed into energy and technology, and money flowed out of discretionary, staples, and industrials.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
We can see that in the charts below, too. Notice that tech saw week-long buying, but then a sudden selling spike late in the week. Buying was in larger chip-makers and software firms while selling was in some AI stocks and smaller names. Some iPhone component suppliers also got hit with news about China banning phone sales to, or use by, government employees. We also see the push into energy stocks. As crude oil grinds higher, money flowed into oil and gas exploration and production companies. Discretionary stocks saw outflows broadly from hotels, big brand electronics retail, casinos, rental cars and more:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
When we dig further, we can see that staples were also dumped. Everything from discount retail to old standards like Coke (KO) and Hormel Foods (HRL) was sold in the sector.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Lastly, we see an exodus out of utilities stocks:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The way all this activity shook out was that the sector rankings are still pretty strong for bullish activity.
The volatility norm of September, along with this recent selling, may not preface a big bull run yet, but having the top sectors as tech, energy, discretionary, and industrials is very constructive. Naturally I’ll have an eye on them to see how they shake out, but normally bull markets are led by growth sectors.
And that’s the case now – right down the line, as the doctor ordered:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
September finds the weather sweet, as some cool winds begin to blow through town. It’s a wonderful time, leading to the fourth-quarter bonanza, the end of the year, which brings holiday cheer and usually great performance for stock investors. September can be a rough month for investors, but it helps to have some perspective. For now, we must slog through this seasonally choppy time of year and look for great stocks on sale. If those are timed right into a big lift at the end of the year, that can add up to juicy gains.
It always helps to have some perspective. This week, September conjures the solemn memory of 9/11, which we shall never forget. What’s a little stock volatility when you have your health and life?
Alan McKay said it best: “Perspective is worth 80 IQ points.”
Navellier & Associates owns Coke (KO) in some managed accounts but does not own Hormel Foods (HRL). Jason Bodner does not own Coke (KO) or Hormel Foods (HRL) personally.
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
World Trade is Waning as the G20 Meets in India
Income Mail by Bryan Perry
Investors Look for A “September to Remember”
Growth Mail by Gary Alexander
September Speculations in Railroads, Real Estate and Russian Rubles
Global Mail by Ivan Martchev
The Yuan Wild Card Just Got Wilder
Sector Spotlight by Jason Bodner
September 11 Puts Any Market Moves in Perspective
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation/distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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