Date: September 6, 2022


Labor Day weekend in New England is always bittersweet as the unofficial end of summer and back to school. The drought-stricken Northeast is finally getting some relief and currently in a deluge. I think we have 5 inches of rain so far and it’s still coming down in buckets.

The stock market has been no different of late with a deluge of its own, falling almost 9% since the mid-August peak and back to down 19% on the year. Some of our strategies have greatly reduced exposure over the past few weeks, while some have not. But in the heat of the moment I never feel like it’s enough. Of course, then the market pivots and I don’t feel like I have enough exposure. Rinse and repeat.

We already know that September is a cruel month and I offered the stats last week. I also mentioned that when August is weak, the week after Labor Day usually sees some strength which is indicated in the pre-market. I would still keep in mind that Friday closed sufficiently weak that an opening bounce may have a tough time gaining traction. Ideally, bulls want to see Friday’s lows exceeded before a better rally begins.

When I review my four key sectors, I only see one message and that is of struggles. High yield bonds look worse. The major stock market indices confirm. Nothing in those comments is new. It’s just stating the obvious, for now. The stock market is oversold on a short-term basis and could and should bounce this week. However, I still think we need to see more time go by and perhaps get us to October before another meaningful bottom is in.

On Friday we bought NUGT, RWM, more HUM and more MLI. We sold AVUV, XOP, FDVV, PEY, IP, FHLC, FSTA and levered S&P 500.


Paul Schatz, President, Heritage Capital