How do the seasonals look? see the first chart below. the rest of August should be fine, but the history book tells us that you need to be wary of September, particularly the back half. all else equal, when taken together with the prior three points, this leads me is to think that market forces are on the side of the bulls until early September, then quickly swing in favor of the bears.
where does fundamentally leave me? the good news: the US economy — anchored by the all-mighty service sector and a strikingly strong labor market — is still generating a huge amount of nominal growth, and we can finally breathe a bit easier if the upside boundary of inflation has been marked. the ongoing challenge: we�re still in a cat-and-mouse game where the Fed needs to pull the hard yards and maintain the fight against still-super-high inflation. so, while the fundamental backdrop and the technical setup is locally better for the bulls, I think it�s too early to call for an all-clear as problematic inflation lives on. in the end, I�m inclined to believe the market will grind higher over the rest of the month … then, the winds shift come September … and the broad pattern of 2022 continues through Q4: a big, turbulent range trade (that does little for one�s self-confidence). as always, I�m a taker of feedback.
