September seasonality, say hello

You can’t reasonably head into September with a clear conscious if you aren’t aware that you’re entering the most volatile time of the year.

Just like last year, September tends to have the choppiest market conditions which tends to lead into new highs through year end.

Check out this chart showcasing the NASDAQ seasonality going back to 2013:

Given yesterday’s drawdown, it shouldn’t be out of the norm to expect more volatility either.

Keep in mind that volatility doesn’t necessarily mean new lows. It just means stocks will be violent, potentially in both directions.

And we’re seeing that play out across the board as low volatility stocks continue to outperform high beta stocks.

You’ve probably noticed most of our trades over the last month have been in sectors and industries groups that reflect this trend change towards overperformance in low volatility stocks.

This is why.

Speaking of low volatility outperforming high beta, let’s take another peek at the technology sector in relation to the broader market:

Last week we talked about the possibility of the technology sector finding resistance at their previous all-time highs.

Do you think this resistance holds into another 24-year high? Or do you think that the technology sector finally flips this area of resistance, turning it into support for a thrust higher?

The most important industry in the market (and a large component of the technology sector) already has.

What are the odds semiconductors fall back below their previous resistance area? Not high.

This is how technical analysis works. And why I follow levels.

It’s also why I think technology will eventually break out against those 2000 highs.

And that makes a lot of sense given that technology has been the leader of every bull market over the last 10 years.

In the meantime, other sectors are breaking out on an absolute and relative basis:

These types of stocks might not be what most people want to be working but it’s exactly what is working.

And that’s the game we play: focus on strength and own it long enough to make some money on it.

As for the tech? It’s just a matter of time before we breakout again.

But first we have to deal with seasonal September.

We’re going to talk more about this tonight during our September Monthly Charting Session.

You can access it FREE by clicking here:

We’re starting at 7PM EST on the dot. Let’s get to work!