Daily Brief - Sell after Labour Day

TLDR: September is a weak month, especially after a strong August. In addition, the Fed is cutting. Trim your longs.

We have two interesting images for you today.

The first one you can see above: September is a weak month after Labour day, and that holds especially true when August was up. 60% of time, the market falls.

The second one is right below. When the Fed begins cutting (in September) you don’t want to stay in the equity market.

And that’s all really. Be wary, Sep might be a weak month.

Bonus content galore: go and read the Leading Indicator daily, even our leading indicators are pointing to a drawdown.

How to trade it

For allocators, long treasuries.

For traders, 1x2 put spreads, or even skewed butterflies (1x2x1 put spreads) look interesting to us. But at these levels you might even go outright.

Market Movers: September Seasonality

Here is the 1-month performance of S&P sectors in the month of September, using 5 years of historical data:

1. S&P Real Estate: -5.32%
2. S&P Information Technology: -4.32%
3. S&P Telecom: -4.15%
4. S&P Materials: -3.75%
5. S&P Industrials: -3.46%
6. S&P Consumer Discretionary: -2.85%
7. S&P Consumer Staples: -2.47%
8. S&P Health Care: -2.47%
9. S&P Utilities: -2.33%
10. S&P Energy: -2.16%
11. S&P Financials: -2.03%

Earnings Spotlight: NVIDIA earnings on deck

As global stocks hovered near all-time highs, anticipation built around Nvidia’s earnings release, a crucial event given its massive $3.2 trillion market value and a 3000% stock increase since 2019. Expectations were sky-high with forecasts suggesting revenue might have doubled, although traders braced for a potential 10% swing in market value—potentially the largest ever for an earnings release.

Referred to as the "most important company in the world," Nvidia's performance is pivotal, not just for its own stock but as a bellwether for AI investment and the broader tech sector. Any disappointment could significantly impact megacaps and other semiconductor stocks, pivotal to the 2024 rally driven by AI integration.