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Top 3 Market Fundamentals For This Fall

Posted Saturday, August 31, 2019 by
Shain Vernier • 2 min read

The Labor Day Weekend holiday is upon us, and with it, the sentimental end to summer. Although the season officially ends on September 23, Labor Day is the last big hurrah of peak summertime travel and leisure. Come Tuesday, September 3, institutional traders will begin shifting attention to their market gameplans for the fall. 

As we make the transition from summertime heat to fall frost, a set of unique market fundamentals are going to begin playing a larger role in finance. At the very least, we are likely in for heavy volatility and one history-making event. If you are an active trader, there may be no better time than fall 2019 to be in the market.

3 Market Fundamentals To Watch

Aside from a jam-packed economic calendar, the period from 3 September to 31 December will bring three fundamentals critical to the markets. Below is a quick preview of each:

  • Brexit: Brexit Day is scheduled for 31 October, 2019. This event will make history, with the fallout being largely unpredictable. The odds of a no-deal Brexit are growing due to the election of Boris Johnson as P.M. ― will the markets react favorably to the U.K.’s final departure from the E.U.?
  • Global Economic Cycle: All we have heard over the past several months is that the global economy is going to slow down. Trade wars and the projected fallout have central banks around the world favoring dovish policy. Can the bankers head off a perceived recession?
  • 2020 U.S. Presidential Election: Make no mistake, America’s markets and economic fate are currently tied to the Trump administration. No matter one’s politics, the stock market bulls are fond of the Trump White House. Do the markets believe that he will win re-election in 2020?

No doubt, there are many questions facing the financial community and not a whole lot of answers. Therein lies the reason for the summertime rally in safe-havens ― uncertainty.

The DOW’s Uptrend Is Alive And Well Going Into September

Since 1 June, the DJIA DOW has been on a rollercoaster ride. Volatility has picked up considerably from the spring, as has participation. In truth, summer 2019 may have been only a warm-up for summer 2020. From now until then, there is a strong chance that periods of unprecedented market behavior (rallies and crashes) will occur.

Dow Jones Industrial Average (DJIA), Weekly Chart
Dow Jones Industrial Average (DJIA), Weekly Chart

Overview: From a technical perspective, the DJIA remains in bullish territory. Fresh all-time highs are within 1000 points, with values up almost 5000 points from 2018’s holiday season lows. The key number to watch in the DOW for this fall is 25,226. This area represents the macro-wave 38% retracement; as long as values are above this level, the bull run in the DOW is valid.

However, the above market drivers each have the potential to move the DJIA’s needle. Countless scenarios may unfold, bringing chaotic price action. Bullish extension or correction are both possible; the only questions are which and to what degree. 

From now until Christmas, buckle up. Volatility is on the way, and with it, opportunity. Given the proper mindset, fall of 2019 may go down as one of your best quarters yet. Best of luck, and be sure to stay tuned to FX Leaders for full coverage of this monumental season.

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