Trading lows look to be near but could materialize at $SPX 3980-4000 over the next 1-2 days before rallies get back underway to kick off the month of September. Looking back, Monday’s stabilization attempt really didn’t generate that much conviction that lows could be in place. Sideways consolidation for 9-10 hours in S&P Futures rarely are convincing that a pullback is bottoming out. Watching for evidence of yields topping out, or $AAPL bottoming, are two key factors which would be helpful towards the idea of an Equity bounce starting to get underway. Overall, a 50% retracement of the June rally pinpoints 3981 as being important which lies just about 1% lower. It’s expected that while seasonality could be difficult for September, any volatility likely happens in the back half, not initially. Thus, buying this dip looks correct.
$AAPL needs to stop falling to provide some tailwind for $SPX
$AAPL remains one of the most important stocks in $SPX, $QQQ to watch carefully given its representation within $SPX and $QQQ as one of the top holdings.
$AAPL’s uptrend line break on 8/22 directly led to Technology starting to weaken, and was considered important and negative. After Monday’s decline, this doesn’t yet look complete.
Support on weakness likely does not materialize until $158 which lines up with the 38.2% Fibonacci retracement level of its prior advance. Violations of that might prove early to bet on, but would target $152.40, or a 50% retracement of this prior rally.
Cycles show $AAPL likely to experience some mid-to-late September weakness into October, so that ~$152 level very well could come in play within the next 5-6 weeks.
The success of having regained nearly all of the 2022 weakness into mid-August keeps $AAPL largely on top of the field of Tech stocks to consider, given its resilience.
Any return to August highs given prior failures likely will lead to a breakout back to new high territory given the bullish makeup of this base. Overall, $AAPL is attractive, and dip buyers likely could utilize a bit further weakness this week to buy $AAPL.
Uranium remains a favorite area for longs technically
Stocks and ETFs associated with Uranium are continuing to show above-average gains as more and more countries give the nuclear option more consideration given the ongoing Energy crisis.
High volume breakouts in $ETF’s like $URNM, $SRUUF along with stocks like $CCJ make this area compelling to consider at a time when markets have been weakening.
Further near-term upside for the Sprott Uranium Miners ETF $URNM looks likely to $88 initially from its current $77.55. Moreover, while April highs at $94.85 could offer some minor resistance above $88, this would be quite constructive technically. Targets near last November peaks at $104 are a distinct possibility as this breakout starts to gain further traction.
September remains the worst month for Mid-Term Election years
As has been discussed in recent weeks, September’s returns aren’t likely to buck the tide of mid-term election year probabilities, which are decidedly negative.
While the months of July were able to grind higher, September has the dubious distinction of the worst month of any in Mid-term election years (going back since 1874) with average returns of -0.9%, which leads June as being the worst month of the year.
Cycles show the front half of September to be far kinder to US Stock index returns than late September. Thus, it’s not wrong to consider buying dips as August comes to a close, expecting strength up into 9/14-9/15 before the near-term downtrend reasserts itself.
Once September is out of the way, it’s expected based on a combination of cycles, poor sentiment and July’s uptick in momentum should be able to drive markets higher from October-December of this year.