Summer is over. The transition period between Summer and Fall is usually an exciting time for investors, as they are back from their hard earned vacation and had had time to reflect on their investment strategy. A few things are usually awaiting the investors in September. However, 2019, it is different: Spring and Summer have seen wild swings and roll-coaster trends andinvestors did not have opportunity to relax over Summer.
First, the seasaw trends:
- After a sustained upward trend over 2018 that lasted until the end of Summer, there was scary dip in 2018 Q4. The Dow Jones Industrial Average (^DJI) dropped from 26,648 on Sep 1, 2018 to 23,327 on Dec 1, 2018, or 13%. ^DJI almost recovered and
reached 26,593 on April 1, 2019. By May 1, 2019 the ^DJI had dropped to 24,815 and then popped up to 26,865 by July 1, 2019, a record. By August 30, 2019, The Dow Jones Industrial Average had gone back to levels of end of Summer 2018, basically to square one .
- Similar trends in Nasdaq Composite Index (^IXIC): 8,109 on Sep 1, 2018 to 6,635 on December 1, 2018 and then to 8,176 on July 1, 2019 and back to 7,963 by August 30, 2019.
- Meanwhile, US jobless claims continue to fall, as well as the unemployment rate
- There are signs of diminished U.S.-China trade tensions
- Federal Reserve leaders, have been hinting at reviewing interest rates, to sustain the economy.
But, there are events and data pointing to potential challenges in the market:
- Usually, on average, September has been the worst month for the investments markets. Given the trends, uncertainity and seasaw movements observed since Sep 2018, and especially the weaknesses in August 2019, September 2019 may turn out to be an even worse month
- Despite the positive signs, U.S.-China trade tensions remain of a major concern
- Brexit continues to fuel uncertainty in international markets.
- News or rumors of looming economic recession in US growth remain pervasive. Some investors experts and politicians have been warning investors against overreacting. However, credible investors continue to highlight the signs pointing in that direction.
- The oil sector continues to experience a seesaw movement of uncertainty. Oil Futures point to a potential cut in production, with the aim to boost oil prices. In fact, crude oil prices have been dropping quickly over the last months, with major oil producers refusing to cut production.
On top of all that, US are going through a rollercaoaster with presidential elections with interesting candidates on the democratic side and a low level of public enthusiasm and concern in the republican quarters.
With the mix of positive and not so positive factors, investors should brace for increased uncertainty in Q3 and Q4 2019.
© AroniSoft, LLC, 2019
Source: AroniSoft, LLC, August 31, 2019