4 min read

The "Labor Day Phenomenon" in Play This Year?

The holiday sometimes serves as a sort-of dividing line between the "summer market" and the stock market that prevails the other 8 or 9 months of the calendar year. My crystal ball is hazy (as usual), but I feel compelled to say we may be looking at just such a situation again this year.
The "Labor Day Phenomenon" in Play This Year?

I'll review our premium portfolio in a moment (skip to the "subscribers only" video at the very bottom of this article, if you'd like).

But I wanted to share my overall market views for the benefit of everyone.

Suffice to say I always find late summer trading conditions very frustrating.

Trading volumes tend to be thin. Most of us have tuned out of the stock market's ups and downs (and that's a good thing).

The market drifts.

I find myself wishing I owned a Gulfstream V jet so I could avoid crowds, and take myself and my family somewhere really far away (at least in pre-COVID times), not to come back until after Labor Day.

Why Labor Day?

Keep reading below, or watch the video!

"Summer Markets" vs Rest of the Year

The holiday sometimes serves as a sort-of dividing line between the "summer market" and the stock market that prevails the other 8 or 9 months of the calendar year.

My crystal ball is hazy (as usual), but I feel compelled to say we may be looking at just such a situation again this year.

I'll give the odds 60-70%.

I say "again" because I put together a video last year - August 4, 2020 - asking the question "Could the Stock Market Rally End by Labor Day?"

And sure enough that's what the market did - rally all the way into Labor Day weekend 2020 - and selloff immediately afterward!

S&P 500, Labor Day 2020

If I could only be so right about things all the time, right?

It wasn't the end of the world - just your average 10% garden-variety stock market correction. But if you weren't prepared, it would have shaken up almost anyone.

Likewise, Labor Day 2018 became an important prelude before a sizable months-long market correction:

Nasdaq 100, Labor Day 2018

2014 saw something similar:

Nasdaq 100, Labor Day 2014

Labor Day 2010 was more of a bullish marker - the "liftoff" point as stocks rose 34% over the next 6 months:

Nasdaq 100, Labor Day 2010

But the most memorable lead-up to a Labor Day holiday?

Labor Day, 2000, most definitely.

The Nasdaq had undergone a big correction months earlier. But the damage seemed contained, and few on Wall Street were willing to venture that the tech bubble of that era had well and truly "popped."

At least, it seemed that way - until everyone came back to work after Labor Day weekend:

Nasdaq 100, Labor Day 2000

The S&P 500 seemed even more bullishly inclined heading into the 2000 Labor Day holiday - coming very close to setting a new all-time high before "Mr. Market" lowered the boom on everyone:

S&P 500, Labor Day 2000

I'm "cherry picking" events to fit my thesis, of course.

Sometimes Labor Day is important for the stock market - for corrections or market bottoms. Sometimes not.

I'm not particularly bearish or bullish. But the way I view these things though - forewarned is forearmed, for both risks and opportunities.

Portfolio Outlook

As for those opportunities - how about becoming a premium subscriber so you can access more of a strong-performing stock ideas, and weekly update videos, such as in this one in the video below?

As far as our portfolio goes, I think it's holding up quite nicely. For instance...

Last week I noted how the Russell 2000 small cap stocks - pretty quiet and a little weak since March - suddenly started to "wake up" and perform better.

I think it's likely because of bets that inflation may be a bigger factor in the US economy than the Federal Reserve is willing to admit.

Moderna (MRNA) continues to be strong - I continue to reiterate that I think the stock will rise to $750 to $1,000.

Many of our stocks "acted" better than their charts give them credit for.

The best example of the week is Wrap Technologies (WRAP). As I noted in my "Keep the Faith" note to you last week, the company reported quarterly results, with a "miss" in its earnings estimates.

Investors focused on that and completely disregarded the best news - WRAP's revenue rose more than 300% compared to year-ago levels.

The stock went from being down 10% in the post-earnings overnight session (on Thursday) - but investors, realizing the underpricing of the shares, piled into the stock buying shares hand over fist throughout Friday's session.

Watch the video for more details on these and the rest of our positions:

Best of goodBUYs!

Jeff