Swordfish Trading: We’re Getting Close
Stocks moved to recover this week after stumbling in the first week of September. While markets tend to be weak in September and October, that weakness usually doesn’t appear until later in the month. More importantly, in an election year, that volatility can carry through the election in early November.
2024 is shaping up for some extra volatility. We’re on the cusp of an interest rate cut, which will likely kick off a trend in interest rates declining over the next year.
While lower interest rates mean a lower cost of capital, stocks will likely remain choppy. The recent economic data has led some to believe that the rate cuts are coming too late. It will take a few more months of data to determine if that’s the case.
For now, investors should expect markets to trade sideways. Big down days could be used to buy shares of companies for long-term holdings. Traders can look to trade the swings.
That includes a variety of asset classes, including both stocks and bonds.
On the plus side, market volatility is starting to come down after some wild swings in August and again last week. That suggests that while markets will trade sideways, some of the biggest moves may be over for the coming weeks.