The September Affect

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The September Affect

Post  harpal1980 on Tue Sep 01, 2009 3:27 am

Yesterday, the first day of September, lived up to its reputation, as
the major indices plummeted throughout the session. Over the years
September has been known as one of the worst months of the year, often
characterized by declines. Since the beginning of July the major
indices have presented a phenomenal rally, correcting only once during
that time, a correction that was characterized by one drop. Even
though the major indices are still in need for a major correction,
many are speculating what is going to cause the drop. When taking a
glance at economic data, one can see that most of the figures are now
showing major improvement, while earnings and forecasts from companies
are show a much better situation compared to the 1st and 2nd quarters.

The S&P500 closed the session down with a loss of -0.81%, while the
Nasdaq dropped by -1.1%. From a technical point of view, todayís
session could give us a clue as to the future direction. As one can
see on the chart below, the S&Pís last correction was characterized by
one candle stick. Will this correction show the same type of pattern?

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