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The Ides of March, or March 15th, was a particularly brutal day in the Roman Empire as it was the day that Julius Ceasar was stabbed to death in the Roman Senate by a group of conspirators led by Marcus Junius Brutus.  In comparison, the recent debates in the U.S. Congress actually sound downright peaceful.

After a brutal move in August, the SP500 is off to another dismal start in September and is currently down nearly -1.6% on the day to 1,159. For the month-to-date, the SP500 is down -5.2%, which we have coined the Ides of September.  As fund managers marked up their portfolios at the end of August, this early September sell-off was a risk that we flagged in an Early Look note on September 1st, when we wrote:

“LAST 6 DAYS OF THE MONTH (in the SP500):

APRIL = +2.0%

MAT = +2.1%

JUNE = +2.6%

JULY = -3.8%

AUG = +4.9%


MAY = -1.3%

JUNE = -4.9%

JULY = +1.8%

AUG = -13.4%

SEP = ?

Now, if you want to roll the Bernanke Bones on this, maybe this time will be different. After all, that’s what the Keynesians and Fiat Fools have been telling us all along. But if it’s not, the US stock market could have a big problem in September. That +4.9% month-end markup into August end was the most aggressive yet and, as you can see, the higher they mark’em up, the harder they fall.”

Since our note above, a mere five days ago, equities have fallen hard early into September.  That said, as outlined in the chart below, while the SP500 is in a Bearish Formation, the SP500 continues to hold the TRADE support line at 1,137.  For now, we aren’t looking at this as a buying opportunity or a selling opportunity, but rather as an opportunity to cover shorts. 

In fact, we covered two short positions in the Virtual Portfolio today, which were as follows: 

  1. British Equities (etf: EWU)
  2. Capital One Financial (ticker: COF)

With volatility, as represented by the VIX, continuing to be in a Bullish Formation, and up almost 10% on the day, nimbly trading the ranges should continue to lead to alpha generating profits versus wishing for an extended move either up or down.  To that point, as Julius Ceasar famously said:

“Men are nearly always willing to believe what they wish.”

Trade the range.

Daryl G. Jones
Director of Research

SP500 Levels Refreshed: The Ides of September - SPX