{"id":21195,"date":"2023-09-08T07:30:28","date_gmt":"2023-09-08T11:30:28","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21195"},"modified":"2023-09-08T07:30:28","modified_gmt":"2023-09-08T11:30:28","slug":"a-september-warning","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/a-september-warning\/","title":{"rendered":"A September Warning"},"content":{"rendered":"\n

We’re only a few days into the month. But, so far, September is proving to be as treacherous as advertised<\/a>.<\/p>\n

The S&P 500 opened yesterday near 4440 – down 90 points from last Friday’s high. That’s a 2% loss in just three trading days.<\/p>\n

And, it’s only the start. If this September plays out anything like it has in previous years, then the stock market has lower to go.<\/p>\n

But, it won’t be a straight shot lower. The Market Gods won’t make it that easy for the bears.<\/p>\n

Instead, whenever it looks “obvious” that the stock market is headed lower, we’re likely to see plenty of sharp one- and two-day rallies that destroy the bears’ short positions and keep the bulls forever hopeful.<\/p>\n

We’re probably due for one of those sharp rallies right now.<\/p>\n

Take a look at this chart of the CBOE Options Total put\/call ratio (CPC)…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

The CPC is a short-term contrary indicator. It compares the volume in call options to the volume in put options.<\/p>\n

A reading below 0.80 (horizontal red line) shows extreme bullishness. This happens when folks are buying a lot more calls than puts. A reading above 1.20 (blue line) shows extreme bearishness as speculators jump over each other to buy puts.<\/p>\n

The CPC jumped above 1.20 on Wednesday.<\/p>\n

That means as the stock market declined hard to start the month, traders were buying put options and betting on even more downside to come.<\/p>\n

But, in the short-term the market typically doesn’t reward the popular trade.<\/p>\n

<\/p>\n

\n
\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n

<\/p>\n

So with everybody buying put options, the market is more likely to rally in the coming days – just to shake traders out of their bearish positions – before it heads lower later in the month.<\/p>\n

Look at how the stock market behaved following the three previous times the CPC popped above 1.20 this year…<\/p>\n

<\/p>\n

\"Image\"<\/p>\n

In each case, the stock market rose sharply higher just one week later.<\/p>\n

If the market follows a similar path this time, then the S&P 500 could recover much of what it lost this week over the next few days.<\/p>\n

That doesn’t change the intermediate picture – which remains bearish. There’s still an excellent chance the S&P 500 will finish September below its starting point.<\/p>\n

But it’s likely the stock market will rally in the short term and shake out a lot of the bearish traders first, before it heads lower again.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark<\/p>\n

<\/p>\n

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READER MAILBAG<\/h2>\n<\/div>\n

Are you looking forward to a rally?<\/p>\n

Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

We\u2019re only a few days into the month.<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-21195","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21195","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21195"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21195\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21195"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21195"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21195"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21195"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}