Stocks Outlook – Friday, August 24

Thoughts

The stock market’s seasonality is bearish in September. A short term bearish factor.

Fears of a Trump impeachment are short term worries for the stock market. Medium-long term traders can ignore it.

Truck Tonnage is trending higher. A medium-long term bullish sign for the stock market.

Initial Claims are still trending lower. A medium-long term bullish sign for the stock market and economy.

Continued Claims are still trending lower. A medium-long term bullish sign for the stock market and economy.

1 am: the stock market’s seasonality is bearish in September. A short term bearish factor

September is on average the S&P 500’s weakest month of the year.

Here is the S&P 500’s performance in September over the past 20 years.

This seasonality is a short term bearish factor for the S&P in September.

1 am: Fears of a Trump impeachment are short term worries for the stock market. Medium-long term traders can ignore it.

Some people are afraid that a Trump impeachment might lead to a stock market crash. I don’t think so.

Impeachment is possible depending on the outcome of the midterm election. If Democrats win the House (which it looks like they are), then impeachment is a very real possibility.

HOWEVER, it’s highly unlikely that Trump will be removed from office. That requires a 2/3 majority in the House.

Even if Trump is removed from office, Mike Pence will merely be a continuation of Trump’s policies. Nothing much will change.

If Trump is impeached, then perhaps the stock market will experience some short term selling. But this isn’t a medium-long term concern. For example, the stock market mostly ignored Clinton’s impeachment.

Nixon’s resignation was different. The stock market didn’t crash in 1974 because of Watergate. The stock market was in a bear market in 1974 because the economy was already in a massive oil-crisis induced recession.