- Global stock markets have faced pressure in early August, influenced by various factors.
- Traditionally, this period represents a downturn for the major US stock indexes, emphasizing the importance of seasonal analysis based on averages.
- Recent news includes a rate hike by the Bank of Japan and Berkshire Hathaway’s significant stock-selling activities, particularly with Apple.
- The Nasdaq witnessed a robust 23% surge, surpassing its typical seasonal uptick.
- The S&P 500 marked a 14% increase, outstripping its standard seasonal rise of 8%.
- The Dow Jones Industrial Average logged a 10% uptick against its regular seasonal move of 5%.
Reflecting on a personal journey, a decision to switch from Mathematics to Political Science decades ago lingered with a tinge of regret. The intricate dance between a grain merchandiser like myself and the company’s meticulous accountant laid bare the understated complexities of both fields. The recent hullabaloo in global stock markets triggered a blame game across US political realms, with terms like “Kamala Crash” and “Trump Dump” surfacing, irrespective of their direct impact on market dynamics. Pure sensationalism or reality? Alas, reality rarely garners the spotlight it deserves.
A recent insight flagged a bearish reversal on the Nasdaq’s monthly chart by month-end July, signaling a long-term downtrend. However, contrasting this, the S&P 500 and Dow Jones Industrial Average did not display such reversal patterns, hinting at a plausible “normal” retracement phase, commonly labeled as a “correction” by industry pundits. The narrative is far from conclusive as nuances suggest this could just be routine retracement activity.
Foray into seasonal analysis as my son shared a seasonal chart for the Nasdaq showcasing its historical dip around this period based on weekly closures. While the 2024 downturn appears pronounced, deciphering seasonal patterns demands a broader lens acknowledging averages over different timeframes. Akin to the Nasdaq, my S&P 500 studies reveal a substantial dip during August and September, surpassing regular seasonal norms by a significant margin.
Similar trends emerge from the S&P 500 seasonal investigations pinpointing a notable deviation from historical norms. The recent dip, though sizable, echoes the essence of seasonal volatility, a common phenomenon within the market ecosystem.
Transitioning to the Vacuum Velocity analogy, markets often exhibit freefalls post a parabolic surge, a prelude to refreshing buying sentiments. Echoing Newton’s Third Law, the behavior of the major US indices after hitting April lows seems to validate this theory:
Amidst the cacophony of market blame games, it’s essential to recognize the global market turmoil extending beyond the US borders. The recent tumult in Japan’s Nikkei, nosediving by 12% initially (with a 10% recovery next day), mirrors the pan-continental turbulence. Kudos to the US Federal Open Market Committee for preempting interest rate announcements, veiling market upheavals as witnessed in Japan.
Further validating Newton’s legacy, Warren Buffett’s Berkshire Hathaway’s strategic stock-selling spree in the previous quarter, especially offloading a substantial 55.8% of Apple shares, indicates a seismic shift in global investment dynamics. The reverberations of a single market player’s actions ripple across the financial landscape, unraveling new narratives within the market realm.
Shedding light on the “BRACE” persona, a mere regurgitating entity in the market quagmire, serves as a cautionary tale against erroneous information and misleading statistics.
The views and opinions shared in this piece are the author’s own and not reflective of Nasdaq, Inc.