by Three-Day Rule Challenges Q3 Rally
Now that we have come upon Labor Day and the month of September, we approach the last breaths of Q3. As Americans, we set our sights on sooner than later, finally escaping 2020. It looked as though we would enter the weekend with continued high hopes for the market, but trading on the third and fourth of the month was a major vibe-check.
The S&P 500 tumbled 2.3% over the week, and the Dow Jones Industrial Average slid 1.8%. Despite starting with stock splits from Tesla and Apple as well as several indices reaching all-time highs midday Wednesday, the continual unprecedented growth was finally stunted. Losses in the aforementioned equities alongside Zoom trail-blazed a noticeable selloff, and analysts have taken a qualified stance, attributing the lack of investor confidence era at large.
Labor Day is here, and we have truly entered the last leg of the odyssey that has been the current year. This means a lot of reflection and a greater awareness to how chaotic and uncontrollable our national environment really is with COVID-19 still kicking. Although lower than estimated, unemployment rates still remain at an alarmingly high 8.4% alongside minimal progress towards another stimulus package. Our overlooked unemployment problem combined with election fears generated by the overwhelmingly divisive nature of the current republic leave little to look forward to as we come upon Autumn with no reliable word on any vaccine in the near future. Major players such as United and Coca-Cola plan to lay off employees.
A defining moment comes end of Tuesday and Wednesday of this week when the markets reopen after our long weekend. Will repeated losses simply follow the three-day rule, suggesting that traders are letting the dust from last week settle before buying the dip? Or, without substantial reinvestment following market’s open, is this some sort of larger, “putting things into perspective” market correction? Regardless, when all we have had to talk about over the past month are absolutely insane gains, the coming days are sure to keep the country on its toes.
-Derek