Today was one of those days where we kept getting further from our goal of a 7 digit stock account. All is good on the home front though; what can we really expect our of a October with a bunch of inflation fears and oil soaring? The best thing that we can do is dollar cost average into our long term high conviction positions and don't sell. Du ring times like these, I don't trade options all that much, but let's recap what has been going on.
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The S&P 500, Dow and Nasdaq dropped to erase earlier gains. Treasury yields advanced across the curve, and the benchmark 10-year yield hovered around 1.61%, or its highest level since June.
Stocks have traded choppily over the past several weeks as investors contemplated the equity market implications of ongoing price increases against a backdrop of decelerating economic growth.
Elevated demand and supply-side shortages have pushed up the prices of commodities from oil and natural gas to cotton, and labor shortages have raised the specter of lasting increases in wages and higher costs to employers.
This week, investors will receive the Bureau of Labor Statistics' latest Consumer Price Index and Producer Price Index, each for September.
"'Stagflation' was the most common word in client conversations this week as equity market volatility remained elevated," David Kostin, Goldman Sachs chief U.S. equity strategist, wrote in a note Monday morning. "Stagflation is not our economists' base case expectation, but the weak historical performance of equities in stagflationary environments helps explain why investors are concerned."
The economy has always been chugging along since the Covid lows of 2019, sometimes to much, and now it has slowed down. In my humble opinion, it seems like that was inevitable and would be occurring in September/October. If you are like me and use Trend Spider for seasonality, this wasn't hard to see.
Let's take into the September 'dip' into account on the VTI (total stock market ETF). September is the worst month by far over the past 10 years and only had a 44% chance of 'going up'. However, October is at 70% chance of 'going up', but I would add that it is up from the September lows on the last day of last month - not up from the beginning of the month (before it started pulling back). Now I drew out the purple measuring tool with an average slope of incline to the last day of October, and it looks like we are actually on track for one of those 70% up Octobers. But even if we follow an average slope of incline, we didn't make it back to the high highs of September. This could be an interesting support as well on some stocks and ETFs.
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