Despite the seasonal volatility and uncertainties surrounding the economy, the S&P 500's bull trend remains intact, according to the latest insights from Stock Trader's Almanac.
The note highlights that while the market has faced some turbulence, especially towards the end of August, the broader trend continues to show resilience.
The recent market action reflects a "textbook election year August rally," recovering from the August 5 lows.
Stock Trader's Almanac notes that while September and October are historically challenging months for markets, particularly in election years, the overall outlook remains positive.
"Bullish election forces remain at play," the note emphasizes, even though these months are among the worst for the Dow Jones Industrial Average (DJIA), S&P 500, and NASDAQ during election years.
The note states that market conditions are admittedly tumultuous, with the S&P 500 up 16.8% year-to-date and the NASDAQ up 17.4%, while the Russell 2000 lags behind with a 6.1% gain.
Despite this, the Stock Trader's Almanac encourages patience, highlighting that macrotrends, technicals, and the U.S. economy still support the bull market.
"We are well positioned and ready for the fatter pitch later in Q3 or early Q4," the note advises, suggesting that investors should stay cautiously optimistic while waiting for better opportunities to arise.
While the market faces short-term headwinds from seasonal weakness and geopolitical tensions, the Almanac believes the S&P 500's bull trend remains supported by underlying economic and election-year dynamics. Investors are advised to remain patient and positioned defensively "ahead of this notoriously volatile timeframe."