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As you know, I am on “vacation” this week, otherwise known as a cross-country move. No move is fun, and this one is no exception. I will be back in full gear next Tuesday after the Labor Day Weekend. So this is just an ever so brief note.

August finished with the 7th monthly bull bar in a row. That matches the record since the inception of the E-mini contract 25 years ago. There has never been 8, so that will make September quite the test. When these winning streaks break, we usually get 2-3 months of bear bars.

While the weekly and daily charts have tolerable angles, it is the monthly chart that has that parabolic “blow-off” look, much like 2017 did. We all know that this is courtesy of the Federal Reserve.

But we also know that what goes up, must come down eventually. So we likely have a 50% correction in our future, or some kind of wide, multi-year trading range when this party ends.
In the meantime, steady as she goes. 

The Founders Group is content with our 10% positions in September calls in each of the XLF and XHB. I will look to take profits or roll these early next week. I am also content with our 10% position in October calls in each of the QQQ, IWM, and XLE calls.

We should get our typical early month strength for a few days, and a fairly sizable dip mid-month on the 80-day cycle. We are also in seasonal weakness for stocks in September and October, but there are a number of sectors coming out of recent corrections so while I will take seasonality into account, it does not rule price.

More than anything right now, the market has been climbing the wall of worry. So it may be one of those times to pay closer attention to “worry.” Worry is neutral, at least according to the CNN Fear/Greed index. When this and other sentiment indicators tilt back towards “greed,’ we should pay close attention.

Have a great holiday weekend.

A.F. Thornton