The trend of September
Interview: BollingerBands.com---Bollinger, John---President (slow)
>> he says stocks will continue to move sideways for the next five years or longer but that isn’t necessarily a bad thing.
>> john bolinger of bolinger bands.com. thanks for being on the program.
>> thanks for having me, bob. pleasure to be here.
>> i wanted to begin by asking you about the trend of september which has been poor for the markets, it’s been the weakest month for markets, as we’ve been saying quite a bit here lately. in fact, we haven’t had an up september in the s&p 500 since 1998. people are assuming that may or may not pertain this year. what do you say?
>> well, you know, up septembers aren’t all that rare. it’s just that they are rare in comparison to the rest of the months. roughly 41% of septembers are in the plus category t problem is that that number is better than 50% for all the other months of the year. so in comparison, september is a pretty poor month. doesn’t necessarily mean it will be a down month. september really hallmark ought to be a hallmark of volitility, not so much on the downside but just volitility in general, and it kind of upsets the markets in preparation for october which is where most of the serious market bottoms have been made.
>> so how about this september, though? how is this year different, or is it?
>> well, no, it’s not very different. typically coming into the beginning of september, the end or beginning of september, it’s a strong period. the weakness starts to fade after the first week or so. we start to see increasing volitility. so we are pretty much along the lines of traditional expectations here. and i think volitility is going to be building up here. it’s going to be very hard to lift prices from these levels. they’ve come an awful long way and profit taking is starting to get attractive. don’t forget that we have a lot of fiscal pressures coming here over the next six to eight weeks. mutual funds will be squaring their books. a lot of other pressures that come in here, including end of quarter pressures at the end of this month, so it’s a very bumpy road here for the next six to -- roughly six weeks. but overall i’m actually kind of constructive on the market, although i’d be prepared, hedging a little bit, maybe moving out of volatile mutual fund into a kind of defensive mutual fund here. but after we get past this little bit of―this little patch of roughness in the markets, i think november, december, january and well into next year it will probably be a pretty good time for the markets. and investors ought to be focusing on more of that opportunity than the kind of roughness that we might see here in the short term.
>> and why is that? you say the next november, december, etc., and forward from that point will be a good time. why?
>> well, the most important thing is that we have very very strong monetary growth. so the demand for stocks on par will be pretty good here. in addition, we’ll have a recovering economy and earnings forecasts will continue to rise. companies will continue to produce some good information, both in terms of their ability to earn and their estimates of their future earnings power. so it should be a pretty decent time for stocks overall. plus investors are in a net deficit position for stocks versus where they should be in terms of where the financial planners and where their retirement plans think they should be. so if the market starts to improve a little bit they are liable to try to move back toward their benchmark levels for equity investment in their retirement plans. it’s very interesting. the baby boomers are coming up on retirement here, and earlier this year at the end of the first quarter, the five-year total return of the s&p 500 was a negative number, first time for that in many many years, two decades.
>> i’m sorry to interrupt. i’d like to direct your viewers to the bloomberg terminal where i’ve drawn an eight-year chart in the s&p 500. in the introduction to you you said basically going back to 1998 we are in a trading range, the s&p 500 had the big runup in the late 90’s, the big run down since then, and talk about that, if you will. in what sense is this some sort of a longer term trading range? well, you know, where your pointer was just before was roughly 1200 for the s&p. that’s where we peaked out in 1998. we are currently trading underneath that level by almost 200 points. for me 1200 for the s&p is probably a pretty interesting psychological level. on the way down the rally stopped there. the first big rally that we got after the 2000 top stopped at 1200 on the way back up. it was the peak in 1998. there is a lot of investor intention afocused on that area. that’s frankly my target for the current rally. i think after we get past this rough spot in the road in september and october, next year rally carried toward the 1200 in the s&p 500. and that will be just about all she brought for that.
>> we are virtually out of time. i want todd direct your views to the bloomberg terminal and show you this 1200 line, you talked about the peak in 1998, you say it’s the peak at the end of 2001 and 2002 and that’s the line you are talking about.
>> that’s correct. about 180 points from where we are now in terms of the s&p 500.
>> thank you john bolinger.
