The SPX was -1.8% last week and finished -3.1% on the month to 1632.97. According to the “trivia” statistic keepers the August trading volume is the lowest on average in more than 15 years.
The current decline from the SPX extremely O/B 1709.67 Pi Symmetry high [2013.6] is now -4.8% from 1709.67 to the 1627.47 low last week. The short-term trend is confirmed down after two lower highs and lows to 1627.47 [8/28]. The index closed at 1632.97 with the 100DEMA at 1632.20, and it has also closed above that inflection point 3 of the last 4 days with a small positive 5 RSI momentum divergence.
There is always headline risk, especially in a low-volume thin liquidity market. However, there is also some unknown risk with Syria, and Obama appears to be choking on an incoherent and obvious non Commander-In- Chief like political strategy as it stands now, so we can certainly expect some trading volatility.
The 10-Year T Note hit its 31.4 year Pi cycle low at 1.394 in July 2012 and made a current high at 2.92 on 8/22/13. It has gone vertical from the 5/1/13 1.614 low. It is price that matters, not subjective reasons after the fact. If the Fed backs off QE the rates will continue to rise.
However, you can bet that the rise in yields is not because of economic demand, or the rest of the statistically insignificant economic data points we get from the Government [Federal Reserve, BLS, and US Treasury] as they all lie and overstate economic growth and employment data in addition to understating inflation.
Two of the three statically weakest months of the year are September and October, with the other month being February. However, that is a quantified average over many decades, but you trade what is, not what has been. Usually September and October are two of the most profitable months of the year for day traders because of the increase in volatility. This month we get the Non-Farm Payrolls and debt ceiling farce, in addition to the FOMC meeting that might alter the QE program.
The SPX previous decline was -7.5% in 22 TD`s to the 100DEMA, and so far the SPX is -4.8% in 20 TD`s with a positive 5 RSI divergence followed by the pop in the SPX futures on Monday, so if the index is to trade lower the bounce will obviously precede a further decline down to the 1600-1575 zone.