Summer Is Over And Markets Are Moving

Time to rock and roll.

US Equity markets are struggling to start the Football Fall season. Not really all that surprised. Two weeks ago we saw a monster intraday reversal at key resistance levels in the major averages. We put out a note that afternoon before the market closed warning readers that short-term caution was advised for the next month. Sure enough, prices have been making lower lows ever since.

If you're a candlestick guy like me, a day like that really sticks out. Those are some of the ugliest candles you'll ever see and it literally creates a red flag:

I'm not sure that looking at bars and line charts would have given you that extreme of a signal. Individual candles really tell an interteresting story.

So going forward, I don't think the time to buy this dip has come. Historically, on election years, US Equities tend to roll over and bottom out in October. We went over this phenomenon a few weeks ago and it seems to be playing out accordingly so far. I'd be surprised if these seasonal trends didn't continue.

We're still cautious on US Equities and we'd focus our attention elsewhere. There are other areas around the world trending better in the short-term.

Tags: $SPY $DJIA $QQQ