At 4pm Thursday if you popped your head out of your office window you could almost hear the bulls cheering up and down Wall Street.
By the end of the session the S&P had officially defied the odds and gained 8.8% - its best September since 1992. As you likely know by now, it’s a remarkable feat considering September is typically the worst month of the year for stocks.
The Dow’s performance was even better. The blue chip index tracked its best performance since 1939.
Investor appetite for risk resumed this month after economic data suggested the recovery wasn’t as bad as feared and a weaker dollar made resource names more attractive.
With the month and the quarter now closed investors are anxious for signs that the rally is sustainable.
”If (future) data and earnings confirm that a double-dip (is off the table ), October may be the month for the S&P to break above trading range and reach the highs that we saw in April," says John Canally, an economist and investment strategist at LPL Financial in a Reuters interview.
Nonetheless it’s difficult not to notice that the S&P 500 made a rather bearish intra-day reversal and is struggling to break above the 1,145-1,150 trading range.
Since September was such a strong month, some investors including Fast Money trader Guy Adami are concerned that October will be a scary one.
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Thursday’s reversal feels like the start of a trend, explains Adami. The S&P traded up to 1158 and sold off hard. This is the first major reversal we’ve seen for quite some time. And the Vix spiked above 24 before pulling back – it's the first time we’ve seen that in a while, too. It seems to me things are in place for the market to sell-off.
I’m a seller into strength, says Karen Finerman. That just seems like the prudent thing to do if you have gains.
I was shocked to see the market fall out of bed and trade down from 1157 down to 1142 and then break that, adds Steve Grasso on the Halftime Report. However the key technical level is 1132 – the 50% retracement. I wouldn’t say the market is reversing unless we break below that level.
