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DJIA: 45,621
It’s a long, long time from May to December… and there’s September. Indeed, September is the worst month of the year. You might have thought it would be October, with its history of crash days. Then, too, those sorts of bad days don’t come in isolation. There’s plenty of deterioration that leads up to them. In 1987 that started back in March, and is hardly the case at present despite Tech’s recent problems. Meanwhile, small-cap stocks have been outperforming – the Russell 2000 gained 7% last month versus less than 2% for the S&P, hardly the backdrop for a big decline. And for that matter, recent Septembers have not been all that bad, gaining 4 of the last 10 years. Most of us divide market analysis into sentiment, or psychology, and momentum. The former shows plenty of complacency meaning there is a risk, but sentiment is never a timing tool. Momentum indicators have weakened but to a neutral rather than negative degree. Stay tuned, but watch those A/Ds.
There hasn’t been much of a correction, especially in the averages, but enough to be worthy of note in some stocks. In what weakness we have seen, it’s always interesting to see what manages to do well. When Tech stocks correct, for example, which manage to hold up. Names we have noticed in this regard include Interdigital (IDCC – 288), Netflix (NFLX – 1257), Performance Foods (PFGC – 105), Roblox (RBLX – 130), Teva (18) and Western Digital (WDC – 90) among others. Meanwhile, for all the emphasis on AI via Nvidia (NVDA – 172) and other Semis, the data center part has some cracks. Dell (127) disappointed this week, and some of the data center infrastructure names like Trane (TT – 413), and Vertiv (VRT – 126) are short term weak. For that matter, look at Digital Realty (DLR – 163).
Frank D. Gretz
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