September bear party?

With stock valuations high and the market chatter nervously fixated on the great tapering debate, the bears claimed victory today with the S&P off 1.6% and the Dow down 170 points.

The impact of Central Bank liquidity has undeniably resulted in lofty stock valuations given the economic backdrop, as the graph of the historical Shiller PE ratio below illustrates.

Click to enlargeShiller PE S&P500 August 2013

September is commonly viewed as the month when investors and traders, upon their return from sunning themselves, get nervous about year end results (read bonuses) and start to take money off the table. The statistics back this up as the graphs below on historical S&P 500 monthly returns illustrates.

Click to enlargeS&P500 Monthly ChangesS&P500 Monthly Volatility

So, today looks to me like the possible opening salvo for a September bear party.  I wouldn’t get too worried though, despite the musings from Jackson Hole there is always a Central Bank around to scare the naughty bears away if they overstay their welcome.

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3 responses to “September bear party?

  1. Fast Eddie

    Yep. Not a good time to buy the market in size.

    On a completly unrelated note, do you have an RSS feed ? I like your site and drop by once in a while but just going through my RSS feeds is more convenient :-).

    Rgds,
    Eddie

  2. Thanks Eddie, appreciate the comment. Was beginning to wonder if anybody was out there!!
    I put a RSS link on sidebar of the site, let me know if that’s not what you meant, I’m not too up to speed the RSS.
    Thanks again.
    Mozoz

  3. Fast Eddie

    Mozoz, works as designed ! This is precisely what I was looking for.

    I stumbled across your blog when I googled for some insurance related stuff. There is not much out there and I am not even talking about quality here…

    Cheers,

    Eddie

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