What happened to our rally? September started so well, with a huge gain.
But since Sept. 3, it's been mostly downhill. The average stock is not doing well. The equal-weight S&P 500 is at its lowest level since mid-July. Health care, banks, energy and small caps are in clear downtrends. As for investing styles, nothing seems to be working in September: Growth, value, low volatility, quality, momentum are all down 5% to 8%.
You can't blame traders for getting worried. Of the half-dozen "buckets" that move the markets, only one — progress on treatment/vaccine — has clearly been a positive this month.
The rest are moving against bulls:
Of all the issues the market is grappling with, valuation seems to be the most difficult. Technology stocks have benefitted from coronavirus and work-from-home, yet no one knows how to accurately value them. Case in point: Apple, going from $100 to $138 and back to $107, all in seven weeks. The largest company in the United States rallies nearly 40% in a month, then drops 22% in three weeks?
When I am confused and baffled, I turn to my old friend, Art Cashin from UBS, recuperating from knee surgery but still watching the markets like a hawk.