September's Market Forecast Looks Partly Sunny, GDP 'Good' News, Trading CrowdStrike

While September historically presents a challenging period for the S&P 500, its current position above the 200-day Simple Moving Average suggests a more positive average return of 1.3%. Second-quarter GDP was notably revised upward to a 3.3% annualized rate, primarily driven by stronger private domestic demand despite federal spending contraction, signaling economic resilience away from recessionary territory. Concurrently, Fed Governor Christopher Waller advocated for a 25-basis point rate cut at the upcoming September meeting, citing concerns over potential labor market deterioration and a desire to move to a more neutral policy stance. Thursday's market session saw the S&P 500 close at a new all-time high, gaining 0.32% led by technology, as investors anticipate key July personal income and spending data.

Analysis

The market is entering September, a historically weak month for equities with an average S&P 500 return of -0.7% since 1950. However, a key technical indicator provides a more optimistic outlook: with the S&P 500 trading above its 200-day Simple Moving Average, historical data suggests the month's average return improves to 1.3% with a 60% positivity rate. This technical strength is supported by resilient macroeconomic data, as the second-quarter GDP growth was revised upward to 3.3% from 3.0%. Significantly, this revision was driven by stronger private sector activity, with "Final Sales to Private Domestic Purchasers" revised up to 1.9% growth, demonstrating economic resilience despite a contraction in federal spending. Further bolstering investor sentiment, Federal Reserve Governor Christopher Waller has publicly supported a 25-basis point rate cut in September, citing the need to preempt a potential labor market slowdown and move policy toward a neutral rate he estimates around 3%. This dovish signal aligns with recent market performance, where the S&P 500 and Nasdaq Composite reached new all-time highs, led by the Technology sector (XLK) while defensive sectors like Utilities (XLU) lagged, indicating a risk-on posture. On a micro level, CrowdStrike (CRWD) exhibited a significant bullish reversal, closing up 4.59% after finding strong support at its 200-day SMA, with its Relative Strength and MACD indicators turning notably positive.

Key Decisions for Investors

• Given the S&P 500's position above its 200-day SMA and dovish commentary from a key Fed official, investors should consider that typical September seasonal weakness may be mitigated, warranting a continued constructive stance on equities.
• The market's risk-on leadership, with technology stocks outperforming and defensive sectors lagging, suggests favoring growth-oriented allocations while being cautious on utilities and consumer staples.
• Traders should note the bullish technical setup in CrowdStrike (CRWD), which has demonstrated strong support at its 200-day moving average and improving momentum indicators, suggesting potential for further upside.
• Monitor the upcoming PCE inflation data closely, as any upside surprise could challenge the narrative of imminent Fed easing and introduce volatility, potentially disrupting the current positive market trend.