I closed the day +33bps, but down more than 8% for August. I started off bad and remained bad until this past week. Overall, the NASDAQ and SPY were down 1.55%, but the small capped $IWM shed 5%. It was a poor month for stocks, leading up to, what is traditionally bad, September.
Here is the data for September over the past decade.
Because of my mean downside bias, I hedged at 17% of holdings in $TZA — with directional longs of the mega capped to tera capped varietal. We are shifting here — I can feel it. The tone of this market has been poor — but the mean reversion to the upside from the recent depths of our lows turned out to be successful.
What I am suggesting is, for whatever reason — markets are adhering to the status quo. Bullish. You can pretend it isn’t — but it is. We might see stocks take off tomorrow, further confirming my theory. I do, however, believe that September will not be accommodating to markets as we really get into it. The earnings season has been mixed: ok for tech but really bad for retail. Very soon the focus will shift severely onto the consumer, as we fast approach autumn and the holiday shopping season.
I make no stern commitments. I am open to all ideas, a sailboat guided by the winds and not obstinately following a pre-destined direction.
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It has a fake feel. Rigged just enough to capture the trend follower crowd and the recent winners mentality. Once the big bank stock inventories are down to size, the narrative wll likely change in coordination with the FED and MSM.