Globe editors have posted this research report with permission of Phases and Cycles. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:
Despite recent volatility, markets have had solid gains year to date. The SPX and TSX both had double-digit gains at 13.4% and 10.8%, respectively, through September 6.
Two historical statistics suggest that markets will finish the year with gains: The SPX has gained an average of 8% in years ending in four since 1990, and markets gained in 23 of the 30 election years since 1903.
At the time of writing our previous Market Comment (August 8, 2024), markets had experienced a major selling climax. The increased volatility was captured by the VIX reaching its third highest level in 34 years. We had suggested that markets would likely remain choppy in the weeks to come but would perhaps return toward or slightly above recent highs.
Markets closed August near or above their respective July highs, and the VIX has returned to a “resting position” between 10 and 25. However, the first few days of September have seen the markets retreat once again toward their respective 50-day (or 10- week) Moving Averages. Furthermore, a 35-day cycle low is expected on September 20, which could see markets correct toward their respective 40-week Moving Averages.
However, the indices have considerable support at this level, which should contain any further potential weakness.
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