Charting Ahead: Alternatives You Can Seize in September

It is a quiet finish to August, with the broader inventory market indexes wavering increased and decrease. The Market Overview panel on the StockCharts Dashboard exhibits fairness indexes closing increased. And sure, the Dow Jones Industrial Common ($INDU) closed at a report excessive.

FIGURE 1. MARKET OVERVIEW PANEL IN THE STOCKCHARTS DASHBOARD. All broader indexes have been up on Friday.Picture supply: StockCharts.com. For instructional functions.

Inventory Market Outlook

With August behind us, we now put together for one of many worst months within the inventory market. PCE information got here out immediately, and it was just about consistent with estimates. This implies an rate of interest lower within the subsequent FOMC assembly is fairly possible. The Fed’s subsequent assembly is not till September 18, and, given historic seasonality patterns, do not count on an excessive amount of upside within the first half of the month.

FIGURE 2. SEASONALITY CHART OF THE S&P 500 INDEX ($SPX). September is normally a weak month for large-cap shares. Picture supply: StockCharts.com. For instructional functions.

The seasonality chart for the S&P 500 exhibits that August sometimes sees a 1% rise within the index. In 2024, the index’s efficiency was barely increased, with a 2.28% rise. September appears dismal, however that is an election 12 months, so issues could prove in a different way.

The S&P 500 has recovered from its August pullback, breaking a downtrend line (see chart under). Since then, the index has been buying and selling sideways, refusing to succeed in its July 16 all-time excessive. But it is buying and selling above its 21-day exponential transferring common, which is trending up.

FIGURE 3. DAILY CHART OF S&P 500 INDEX. The index is buying and selling sideways, near its all-time excessive. The Stochastic Oscillator signifies that momentum is slowing barely.Chart supply: StockCharts.com. For instructional functions.

The stochastic oscillator is displaying some slowdown in momentum, because the oscillator exhibits a slight decline amidst the comparatively flat motion within the S&P 500.

Extra fascinating is the S&P 500 Equal Weighted Index ($SPXEW), which hit all-time highs. The relative energy index (RSI) and transferring common convergence/divergence (MACD) point out there might be room to rally. This means that traders are rotating out of the mega-cap shares and into smaller-cap ones.

FIGURE 4. WEEKLY CHART OF S&P 500 EQUAL-WEIGHTED INDEX. The index is at a brand new all-time excessive. The RSI and MACD point out there’s room for extra upside transfer.Chart supply: StockCharts.com. For instructional functions.

This begs the query of how mid-cap shares carry out. The each day chart of the S&P 500 Mid Cap Index ($MID) exhibits that mid-caps are buying and selling sideways, however the index is near its all-time highs, which occur to be near the higher finish of the buying and selling vary.

FIGURE 5. S&P 500 MID-CAP INDEX ($MID). The index is buying and selling sideways however is buying and selling near the top quality. Market breadth can be increasing, favoring bulls.Chart supply: StockCharts.com. For instructional functions.

Market breadth within the mid-caps appears to be broadening, with 73.25% of mid-cap shares buying and selling above their 50-day easy transferring common. The advancers additionally outnumber the decliners.

You may possible discover a comparable scenario with the S&P 600 Small Cap Index ($SML).

Stockchart Tip!

Click on the above chart of $MID and alter the image to $SML. Voila! You may get an up to date chart particular to $SML.

So, which shares within the mid and small-cap asset class do you have to deal with? That is when it helps to revert to the seasonality chart. Going by way of all of the sector ETFs, Power, and Utilities are typically the leaders in September. Out of the 2, the chart of Utilities Choose Sector SPDR (XLU) exhibits a well-defined development.

CHART 6. DAILY CHART OF XLU. Utilities have been in a pointy uptrend. The RSI and MACD point out there’s room for extra upside. Chart supply: StockCharts.com. For instructional functions.

All transferring averages overlaid on the chart are trending increased. The RSI and MACD additionally assist the upward development.

Closing Bell

So, whereas large-caps sometimes decline in September, it is smart to think about investing a portion of your portfolio in mid and small-cap utility and power shares.

1. On Your Dashboard, click on the Sector Abstract hyperlink (backside proper of Sector Abstract panel).
2. Choose One Month from the Interval dropdown menu.
3. Click on Utilities Sector Fund within the Identify column.
4. Click on the identify of the top-performing Trade throughout the sector.
5. Kind the columns by Universe (U column) by clicking the up and down arrows to the suitable of U.
6. Scroll all the way down to the mid-cap shares and analyze away.

Get pleasure from your Labor Day weekend, and be prepared for market motion to renew on Tuesday.

Finish-of-Week Wrap-Up

• S&P 500 closed up 0.24% for the week, at 5648.40, Dow Jones Industrial Common up 0.94% for the week at 41,563.08; Nasdaq Composite closed down 0.92% for the week at 17713.62
• $VIX down 5.42% for the week closing at 15
• Finest performing sector for the week: Financials
• Worst performing sector for the week: Know-how
• Prime 5 Massive Cap SCTR shares: Insmed Inc. (INSM); FTAI Aviation Ltd. (FTAI); Carvana Co. (CVNA); SharkNinja, Inc. (SN); Tenet Healthcare Corp. (THC)

On the Radar Subsequent Week

• Aug ISM Manufacturing PMI
• Aug S&P International Providers PMI
• Aug ISM Providers PMI
• Aug Non Farm Payrolls
• Fed Beige Guide

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.