ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Almost seven years ago, I developed the “200DMA Signal” to provide a relative measure of major bottoms for the S&P 500 (SPY). The 200-day moving average (DMA) is a long-term measure of a price trend, so it provides a robust assessment of prevailing trends. The 200DMA Signal triggers when the S&P 500’s 200DMA suffers its … Read more
Stock Market Commentary The November jobs report suggested that the employment rate fell to levels last seen before the pandemic. However, the 210,000 additional jobs is well below the 1,000,000 additional jobs estimated by the U.S. household survey. This great divergence is a good metaphor for the uncertainty causing sharp and wide gyrations in the … Read more
August through October are the most dangerous months of the year for the S&P 500 (SPY). The historical drawdowns create a well-known pattern of trading that Jim Cramer of CNBC has referenced several times for at least a month. While this year’s August failed to fulfill its destiny, September delivered on its promises with heavy … Read more
{revised August, 2024} The Most Dangerous Months The stock market’s most dangerous months are August, September, and October. Since 1951, the S&P 500 (SPY) has suffered its three highest average maximum drawdowns in these months. A drawdown occurs when sellers put downward pressure on prices. The maximum drawdown is the largest (most negative) such loss … Read more
The Stock Market’s Value The U.S. Federal Reserve’s dual mandate is stable prices and maximum employment. Yet, when the Fed sets monetary policy, the most direct and immediate impact plays out in financial markets. When the Fed eases monetary policy, the dominant theme the last 20 years, asset prices invariably increase. Indeed, over the years … Read more