In the “market blurb” above this post, we note that over the last ten years the end of August has been stronger. This is based upon the S&P 500’s performance over the last seven trading days in August. Over these past 10 years, S&P 500 has advanced seven times with an average gain of 1.0%. The biggest gain was 8.5% in 2011 and the worst loss was 2.1% in 2010. Prior to 2003, these same seven trading days were down six of seven years with an average loss of 3.5%.
Looking at the chart above, it is clear that with today’s losses S&P 500 is oversold. Stochastic and relative strength indicators have plunged since the first week of August and now sit at levels not seen since last November. The faster moving MACD indicator is still negative, but has slide below its zero line where it tends to generate its best “buy” confirmation crossovers. Should S&P 500 find support around its monthly projected support level (green dashed line noted by a black arrow) like it did in June (blue arrow), seasonal and technical forces could combine to produce a decent finish to the month.