September 2015 Sure Started Off With Quite A Bang, Eh?
After enduring their worst August in 17 years, U.S. stocks are off to their worst start to a September in 13 years. Just yesterday, I declared that we would be entering the “danger zone” this month, and it didn’t take long for the action to begin. Historically, this month is the worst month of the year for stocks, and most of the biggest stock market crashes throughout our history have come in the fall. On Tuesday, the Dow plunged another 469 points, and it is now down more than 10 percent from the peak of the market back in May. That means that we have officially entered “correction” territory. Asian stocks also crashed hard on Tuesday, so did European stocks, and the price of oil plummeted about 8 percent. For a long time, there have been a lot of people out there that have been warning that a financial crisis would happen in the second half of 2015, and they are being proven right. It is actually happening.
Of course there will be plenty of ups and downs still to come. I cannot emphasize enough that we should fully expect waves of panic selling and waves of panic buying. This always happens during any market crash.
For instance, just consider what happened when the tech bubble crashed. The following analysis comes from Graham Summers…
In a six month period, investors moved stocks down 19%, up 8%, then down 27%, then up 21%, then down 22%, then up 34%, then down 17%, then up 16%, then down 28%, then up 16%, and finally down 17%. Only at that point did stocks break their trendline for the bubble (the blue line) and it became obvious that the bubble had burst.
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