After a record setting week in which the market soared to new all-time highs because the Fed did nothing, the market came under pressure today. High on the list of possible reasons for today’s weakness is comments from St. Louis Fed Bank President, James Bullard. Not even a full 48 hours since the Fed decided not to taper; Bullard said a reduction is possible in October. Say what? Didn’t we just hear that it will depend on data? Will one more month of data really confirm a trend? It might be time for the Fed to a little less transparent. Flip-flopping from one day to the next is not improving confidence which will be needed to survive next week and beyond.
In the table above, it is clear that next week, the week after September options expiration, has consistently been one of the worst of the year. Since 1988, weekly declines average from –0.93% for NASDAQ to –1.49% for Russell 2000 and S&P 500 has only posted gains five times in 25 years.
By Christopher Mistal