NEWS
News Flash: September (Usually) Sucks

September is off to a rough start, which is not necessarily surprising given it’s the worst month of the year on average. The volatility has traders and investors asking the same question: is this dip buyable? Most analysts expect earnings and labor market data throughout the rest of the week to set the market’s tone. 👀

Today's issue covers how we know that “somebody always knows something,” tech stocks getting a shellacking after earnings, and crude oil crashing back into negative territory YTD. 📰

Here’s the S&P 500 heatmap. 2 of 11 sectors closed green, with consumer staples (+0.70%) leading and technology (-4.59%) lagging.

And here are the closing prices: 

Most bullish/bearish symbols on Stocktwits at the close: 📈 $GTLB, $SIFY, $DYN, $HYFM, $PCVX 📉 $PD, $RMCO, $CDE, $NVCR, $AZUL*

*If you’re a business and want to access this data via our API, email us.

STOCKS
Somebody Always Knows Something 🤔

September is off to a rocky start, but seasonality buffs know this is the norm and not the exception. Before we get into today’s stats about the rest of the month, we need to talk about Nvidia. 😑

Despite raising guidance after beating earnings and revenue expectations, the stock has been selling off to the tune of $280 billion just today. That’s the largest single-day market cap decline in history.

After the bell rang, some news broke that reminded us of the old adage, “Somebody always knows something.”

Bloomberg reported that the Nvidia AI antitrust investigation is ‘escalating,’ with the Department of Justice (DOJ) reportedly sending subpoenas to the tech giant. Probably just a coincidence that the stock has been selling off over the last few days…right? 🕵️

Anyway, the news sent Nvidia shares down 10% on the day, yet Stocktwits sentiment is still only in ‘neutral’ territory. The question many are asking about Nvidia and several other ‘Magnificent Seven” stocks that are correcting is, “Do we buy the dip?” And this sentiment suggests an unclear consensus view among Main Street investors. 🤷

One factor impacting investors’ approach to that question is their view of the overall market through the rest of the year. So far, with a volatile August and a swift decline to start September, investors are feeling uneasy. 😬

And today’s action isn’t likely to improve quickly, as Jay Woods, CMT reminds us. His chart below shows that September is the worst month of the year and the only one with a negative average return. ⛈️

And although the magnitude of the average decline improves during an election year, it’s still not positive, and October is often even worse! 😫

Grant Hawkridge’s election cycle seasonality chart gives us a good idea of where we are (in red) compared to the past. If history repeats (or at least rhymes), Grant’s analysis suggests the next two months could be rough for stock market bulls. 🗓️

Even one of Wall Street’s biggest bulls, Tom Lee of Fundstrat Global Advisors, is calling for a 7-10% correction over the next eight weeks. With that said, he says it should be a buying opportunity and still expects his ‘40% rally in small-cap stocks by year-end’ thesis to play out. 😮

But nonetheless, history and many of Wall Street’s most-followed analysts are painting a cautious picture for stocks through September and October. Time will tell if they’re right, but it seems nervous investors are selling first and asking questions later. ⚠️

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