It just feels to me like the market wants to do what it usually does in September. That is put in a negative month. Most of the major indexes are off about 2% from recent and in some cases all-time highs. The small cap / growth Russell 2000 Index (RUT) is breaking down and retreating more. Whether that is caused by technical factors or a macro level asset allocation is a matter of debate.
It is worth noting that the RUT has now experienced a pullback of similar magnitude on three occasions this year and is on its way to a fourth. That is to be expected for an index made up of small cap growth stocks, which is 50% more volatile than the S&P 500 (SPX) and is a favorite by the short term trading momentum crowd.
So, as usual, let the traders worry about these short term movements and let the investors focus on the medium and long term. The medium and long term outlook for the equity markets remain the same – we are in a secular bull market.
Sell Rosh Hashanah; Buy Yom Kippur
The two day Rosh Hashanah Jewish New Year’s Holiday begins this evening. That will leave a void in some market activity and liquidity tomorrow and to a lesser extent on Friday. Recall that the markets tend to sell-off during the Rosh Hashanah holiday.
Live Chat to Discuss Recent MarketWatch Article
Before I take off to celebrate the New Year, we will hold our weekly live chat at 1PM. This week’s topic will be a follow up to my recent MarketWatch article on Warren Buffett and Coca-Cola (KO). I hope you can join.
My best wishes for a Happy and Healthy New Year to all. I will be back on Monday.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC had no positions in stocks mentioned — although positions can change at any time.
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