We’re just a day away from officially entering the fall season in the stock market, and I’ve got my eye on two charts to watch in September 2021 that every investor needs on their radar…
But first, I need to cover what will be one of the biggest hurdles in September: the Federal Reserve.
Fed Chair Jerome Powell went on TV this past Friday and was extremely dovish on the prospect of any tightening of the economy.
He was super careful to detail that although the Fed would be buying less bonds, it wouldn’t let it run off its balance sheets right away — which isn’t exactly tapering. However, the stock market celebrated and the inflation trade looks to be back on track.
This is also the last week of slow volume — things tend to pick up after Labor Day — so get ready for volatility to come back into the market!
But in the meantime, here are two of the most important charts to watch in September 2021 as the reinflation trade comes back to life…
Charts to Watch in September and Data to Pay Attention to This Week
Guys, as you know, I’ve had Bitcoin (BTC) on my radar for awhile.
The cryptocurrency world is now ground zero for the reinflation trade. If the market begins to anticipate inflation and the U.S. dollar begins to weaken, you’ll see it in Bitcoin first!
We flirted with $50,000 last week before selling off. That tells me that we need to see the price stabilize above the 200-day moving average this week, and then make a convincing move above $50,000 to the $55,000 level shortly after.
The second chart investors need to focus on this September is the iShares Russell 2000 ETF (NYSEArca: IWM).
The Russell 2000 has been underperforming more than any other main U.S. index in 2021. I’d like to see the Russell stay above the 200-day moving average of $215.
And if we expect the bull market to continue, then it’s a must that the IWM breaks out to new highs it last made in March.
Alongside these charts to watch in September 2021, there’s some BIG economic data coming out that could affect your trades this week.
On Friday, Sept. 6, nonfarm payrolls (NFP) data for August 2021 comes out — which could shed more light on how well the labor market is recovering. The data could also end up influencing how the Fed plans its tapering.
Market analysts estimate that about 750,000 new jobs were created in August. However, at this point, the delta variant is starting to spread all over America. So we’ll see exactly how much of a slowdown the virus is having on our economic reopening.
A NFP number under 700,000 means the economic boom should be expected to cool off soon. Anything above 800,000 new jobs, and the Fed’s case to continue supporting the market will start to look flimsy
The unemployment rate for August will also be released this week. A number of 5.2% or lower would look a lot like we’re getting back to full employment in the U.S.
This could be a possible “sell the news” moment, especially for a market that’s making all-time highs right before a long holiday weekend…
As always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
And make sure to email me any thoughts or questions you may have about the two charts to watch in September.
