BusinessWeek Writes: Anxieties of September Give Markets Reason to Tremble

 September will be September. Forget the fact that the Standard & Poor’s 500-stock index is up 15 percent this year—not far off its record—or that the U.S. market has not had a routine 10 percent correction for more than two years. Never mind howMicrosoft (MSFT) and Verizon (VZ) are throwing billions at deal making. September remains that only month of the year where the Dow Jones industrial average has averaged a decline over the past 20, 50, and 100 years.

Throw in a down and volatile August, and the new month starts anxiously, true to its character. Ed Yardeni of Yardeni Research notes that Investors Intelligence reported a big drop in the percentage of bullish advisers over the past six weeks. The fraction surveyed who saw a correction rose from 28 percent to 38 percent over the period.

“Fear is back on the front page,” says Joshua Scheinker, an adviser with Scheinker Investment Partners of Janney Montgomery Scott. “My clients are so concerned, almost looking for another crisis, whether Syria, the debt ceiling, or interest rates.”

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From a short-term purely technical perspective the market looks pretty good here. The market is somewhat oversold.  I am looking for a good rebound into the 15,300 territory on the Dow by the end of September before the resumption of the bear market.

It is not the September, but October and November that are seasonally horrific for stocks. There is a cyclical reason for that and I might talk about in the future. 

Long story short. Expect a rebound here to around 15,300 by the end of September, then a reversal and continuation of the bear market. However, I would be careful here and keep my finger on the trigger in case the market breaks below 14,800.

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