As we head into the Labor Day weekend, it is important to note that historically the markets have performed well around the holiday. We expect to see the indexes finish up for the week. After that, we would proceed with extreme caution as September has been the worst performing month for investors. Its average return is down almost 1%.

This September also has the added implications of an election. Here is something interesting we read to keep an eye on; if the Dow is up from the end of July to the end of October, the incumbent party has won. The opposite is true if the Dow is down. This indicator has been wrong only four times since the Dow’s birth in 1896. (thanks A.C.) The Dow closed July at 11,378.02.

Looking at the index charts, we see some not so good news. With the exception of the NASDAQ, last week’s early sell off reversed at a lower low than the previous low. (Try to say that 10 times in a row) This is usually interpreted as a weakening of the current trend. While we expect prices to head higher this week, we would be surprised to see any of the indexes breakthrough and close higher than their recent resistance levels.