Fall Stock Market

The seasonal pattern from September through most of October is historically the weakest time of the year. The most serious declines and crashes have happened during this time frame.

Even the decline of 2008 was mostly caused by supply coming on the market. From 2003 through 2008 government worked closely with Wall Street with the goal of elevating and sustaining asset prices.

From 2008 through most of 2014 The Open Market Committee worked closely with privateer firms which aided them in goosing stock prices. After most of the privateers abandoned the project earlier this year, central banks began buying stock directly. Apparently the Fed no longer has the means to offer them risk free opportunities in return for their help.

Currently central banks are supporting the stock market. The will to support the market is still present. Currently there is quite a bit of pressure on stock prices. The appearance is that all central banks are losing control.

September through October is going to get enormous organized support. From now until the end of August look for traders to load up on short positions. Stops will be placed. Watch for the biggest stop hunt in history. Retail brokers assist in these stop hunts. Customer positions are an open book. Suppose Scottrade’s customers are short a lot of Amazon.com, Those are the positions the HFTs will attack first. Retail traders are not important in terms of volume but they represent a naive mindset.

Unstable consolidation patterns will be cultivated to purposely draw in more shorts. This is part of the daily process but during the fall this activity will be pronounced.

Deals will be made with corporations encouraging them to execute buyback transactions during the season’s weakest period. Billionaires with high public approval numbers will make positive statements about the economy and stocks, probably Warren Buffet. Central banks will make up any additional demand needed by buying directly.

The VIX will be hammered relentlessly in attempt to create artificial demand for stocks.

Most of all listen for game changing news to be released at a critical moment. Will the Fed raise interest rates? Every indication is that it will happen. In the event of a serious decline, it might not.

Instead a no interest rate increase might serve as the game changing announcement.

Just Another Day at the Whorehouse is a timely tune by Curbside Jimmy.