For the first time in many years, the first day of the month was a market rout — and the days since have been no better. The well-known trend of weakness in September was highlighted by Fundstrat’s excellent Thomas Lee on CNBC:
Tom Lee of Fundstrat Global Advisors explains why investors should remain cautious from September until election day. pic.twitter.com/amegaUgpnj
— Squawk Box (@SquawkCNBC) September 3, 2024
Following up Lee’s comments, we would expect a retest of that early intraday August low of 5120, representing a 9% drawdown. Markets typically revisit important pullback levels to probe if those prices are truly lines in the sand. These retests can develop over weeks or months, even years. Given the political backdrop, we suspect this one will be shorter-term in nature but with many questions and headwinds, we have concerns similar to Tom Lee’s as the end of this wild election season plays out.
Like him, however, we remain bullish on the market overall. Investors do need to brace for more difficult market action in coming weeks but should also keep in mind that important lows are often placed in the next most scary month: October.
