Fundstrat
Fundstrat: the "September" Effect on the Market
9/3/2025, 1:18:50 PM
Economic Summary
- September opened with a global rise in yields after the ECB signaled reluctance to cut further; UK yields reached levels not seen since 1998, while U.S. yields have actually fallen about 30 basis points in the past couple months, underpinning a treasuries rally.
- Market sentiment remains very subdued despite roughly a 33% rally over the last 20 weeks; widespread bearish positioning combined with a dovish Fed and resilient earnings creates a constructive backdrop for further equity gains.
- There is clear bifurcation in technology: hardware leaders like Apple (AAPL) have outperformed (≈+10% last month) while software pockets, including Palantir (PLTR), have seen sharp moves and extreme RSI readings, implying localized vulnerability.
- Seasonality is a meaningful risk: October and the surrounding two-month window are historically among the most volatile, so investors should be prepared for potential pullbacks despite current technical strength.
- Real rates have come down, contributing to gold rallying above $3,500 and producing a favorable backdrop for precious metals amid fiscal uncertainty.
- Technicals — weekly MACD, RSI, and trend-following breakouts — plus correlations between equities, treasuries, and the dollar are central to positioning; a downtrending dollar and rates favors risk assets.
Bullish
- Dovish Fed, resilient earnings, and subdued investor sentiment could push stocks higher.
- Apple (AAPL) strength indicates tech leadership and market support from hardware gains.
- Falling real rates and a weaker dollar are bullish for risk assets; gold benefits as well.
Bearish
- Seasonal October volatility historically raises downside risk over the next two months.
- Concentrated, frothy moves in software names (e.g., PLTR) with extreme RSI risk sharp pullbacks.
- If leading groups like tech begin to waver, that could trigger a broader selloff.
Bullish tickers
AAPL
Bearish tickers
PLTR
PLTR
Bullish
Strong momentum over the last year has driven price higher; could still see continuation if momentum holds.
Bearish
Rapid, concentrated run-up with monthly RSI around 95 and software group weakness increases pullback risk.
AAPL
Bullish
Hardware strength—up ~10% last month—positions Apple as a leading contributor to tech outperformance.
Bearish
If broader tech leadership wavers, even hardware leaders like Apple could face pressure.
People mentioned
Mark Newton