Home » September nightmare for Wall Street: watch out for some indicators that send buy signals

September nightmare for Wall Street: watch out for some indicators that send buy signals

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September nightmare for Wall Street: watch out for some indicators that send buy signals

Wall Street stock indices deep red in September. When a session is missing at the end of the month and the quarter, the S&P 500 and the other main indices travel to annual lows. The S&P 500 index capitulated 7.9% in September, the Dow Jones suffered a 7.2% plummet and the worst was the Nasdaq, which is preparing to close the month with a drop of 9.1%.

The particularly negative sentiment affects all global equities. Among analysts there are those who see the possibility that this very pronounced negativity will give way in the coming weeks in the most classic of bear market rallies. This is the opinion of Mark Diver and Sarah McCarthy, analysts at Sanford C. Bernstein & Co., according to which “another rally of the Bear market is very likely”.

“Investor sentiment has reached such negative levels” that that the likelihood that global equities will deliver positive returns over the next four weeks is greater than the likelihood of generating lossesanalysts added. In detail, four of the five components of the Composite Sentiment Indicator di Bernstein, including volatility, put / call ratio, investor survey and equity fund flows data reached negative extremes. In detail, over the last 22 years, the indicator’s buy signals have been followed by positive returns in the following four weeks for more than 70% of the time.

In fact, downside demands have increased in the last few days since the last summit of the Federal Reserve, which has stirred every corner of the market. This week alone, Goldman Sachs Group and BlackRock became more bearish on short-term equities, with the former reducing the stocks to an underweight in the three months and the latter advising investors to “avoid most stocks.”

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Bernstein said his study does not imply that the bear market is over and that investors should remain cautious over the medium term, as rising interest rates increase the likelihood of a recession, especially in Europe.

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