September may yet live up to its reputation as a month to spend on the sidelines. A nugget from Robert Colby’s Encyclopedia of Technical Market Indicators: over the last 100 years or so, exiting longs and selling short every year on September 5 and buying on October 27 would have been a profitable strategy that would have outperformed buy-and-hold by 3,014% and would have been right 62% of the time. That strategy would already be profitable this year; we’ll see how it fares over the next month or so, but the inability of the indexes to bounce off oversold conditions suggests that it may work again this year. Certainly the inability to bounce is a change from the trend since March. On the S&P 500 (first chart below), 1010-1015 has now become major resistance again. 1000-1001 is major support; 984 looks like the next good support below that. The Nasdaq (second chart) needs to hold 1812-1815, and from the looks of the futures, it won’t. 1800 and 1776 are the next support levels, and resistance is 1860. The Dow (third chart) broke critical support at 9352-9361. The 9200-9250 area looks like the next good support, and resistance is 9370 and 9500. Once again, we would have preferred to see more put-buying than we got today.
