September 29, 2023

Markets:

Stock futures rose Friday as investors looked to mitigate losses at the end of a difficult month and quarter.

Wall Street is coming off a winning session, as the benchmark 10-year Treasury yield backed off from a fresh 15-year high. Those gains, however, did little to mitigate equities’ sharp losses for the month and the quarter.

The S&P 500 is set to finish the month down 4.6% and the quarter lower by 3.4%. The Nasdaq Composite is off nearly 6% in September, and down 4.3% for the quarter. This month will be the worst in 2023 for both indexes. The Dow is on track for a 3% decline this month and a 2.2% fall for the quarter.

Aluminum prices hit a high not seen in multiple months in the final trading day of what’s shaping up to be the best month since January.

Portfolio:

So far, the markets are behaving as expected, and this demonstrates a robust price activity, which is a positive sign. Recall our year-long hypothesis that we initiated back in January – the prevailing sentiment was that the "pain trade" would involve higher prices due to the substantial number of short positions and those attempting to predict a market top. As we conclude the weakest week for the markets within the current calendar year, we are now entering Q4 with significant seasonal trading opportunities on the horizon. Additionally, the earnings cycle is set to commence, and the upcoming election cycle will play a crucial role in shaping market dynamics over the next year. Remember, the markets typically look ahead 18 to 24 months. All these factors combine to create one of the most promising periods for both active traders and investors in years!

Currently, our positions for the end of Q3 include holdings in GEO, SOXL, KOS, CLF, and ATEN. 

While we consider potentially adding new setups for the upcoming week, our decision will heavily depend on the price action. Given that it's the final trading session of the quarter, we anticipate some market swings. While we generally prefer not to initiate new positions on a Friday, there might be attractive opportunities for short-term swings today. Be prepared, especially as we head into the early part of next week!