Stocks End Week & Month Mixed

The market ended the week and month mixed which is a “good” sign considering September is usually not a good month on Wall Street. The Dow Jones Industrial Average and the benchmark S&P 500 ended the month higher while the Nasdaq and small-cap Russell 2000 ended slightly lower. For the year, the Nasdaq and Russell 2000 are the leading areas in the market while the Dow and S&P 500 are lagging. Therefore, the fact that we are now seeing big money rotate out of the leading areas and into the lagging areas is a good sign. Why? Because it gives the leading areas a chance to consolidate the recent run while the underperforming areas rally. The key now is to analyze the health of the consolidation and make sure it is a normal healthy consolidation and not something more severe. The one worrisome point is that the Russell 2000 broke below its 50 DMA line which is not ideal (since that area has served as support for the past few months). If the selling intensifies that could drag the other indices lower. If not, then this will just turn into a blip on the radar.

Monday-Wednesday Action:

On Monday stocks ended mixed as the Nasdaq edged higher but the S&P 500 and the Dow Jones Industrial Average both fell. The big headline of the day came after rumors spread that Deputy AG Rosenstein would leave his position. Separately, Sirius XM bought Pandora for an all-stock deal and Barrick Gold bought Randgold. Those were two big mergers that were announced.

On Tuesday, stocks ended mixed and were quiet most of the day as the Fed began its two-day meeting. Separately, President Trump said at the United Nations General Assemble the U.S. “will no longer tolerate abuse” on trade and said, “we will not allow our workers to be victimized, our companies to be cheated and our wealth to be plundered and transferred.” On Wednesday stocks fell after the Federal Reserved raised rates by a 1/4 point and raised its economic outlook. The FOMC also forecast one more rate hike before the end of the year and three hikes in 2019.