Is This The Start Of The Sell-Off?

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Stocks have had a record run, but may be showing signs of weakness. Stocks pulled back September 3–4, but after a 60% rally in less than six months, some type of weakness—and a pullback—would be perfectly normal. Sentiment is also quite optimistic, which can be a worrisome signal from a contrarian point of view. The good news is the weakness may be an opportunity.

Jobs remain strong

The August jobs report came in at 1.4 million, in line with expectations. There were worries about a weak number, but again the economy is quite healthy. Additionally, strong global manufacturing is a nice sign for this recovery. The stock market might be due for weakness, but the continuing economic recovery is comforting.

The monthly win streak

The S&P 500 Index is up five straight months, which is actually quite bullish. Since 1950, there have been 26 other five-month win streaks, and stocks were higher 25 times a year later. The stock market is telling us something, and it likely wants to go higher longer-term.

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IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

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