Nasdaq 100 Faces Potential 10-20% Pullback Amid Market Weakness

Money Morning

Market conditions indicate an approaching bearish trend, particularly affecting the Nasdaq 100, which is close to triggering a rare short-term signal that could lead to a 10-20% pullback. The current performance of the Magnificent Seven stocks, crucial for market confidence, has shown weakness amidst a backdrop of uncertain fundamentals and declining investor sentiment. Historical indicators suggest that if the Magnificent Seven continue to falter, the Nasdaq 100 may experience significant declines, as evidenced by past performances following similar momentum readings. Strategies for navigating this turbulence include hedging through inverse ETFs or options, emphasizing the need for defensive positioning in the portfolio during the volatile September period.

Concerns Rise Over Pakistan's $7 Billion IMF Bailout Package Stability

gfmag.com

Pakistan's economic situation remains precarious as it navigates a stalling loan agreement with the International Monetary Fund (IMF), following a $7 billion staff-level agreement reached in July 2023. Despite efforts from the caretaker government to meet IMF demands, approval for the loan has yet to be included on the IMF board's agenda, raising concerns about Pakistan's compliance with the bailout conditions. Deputy Prime Minister Ishaq Dar criticized the IMF for delays, suggesting geopolitical factors may be at play, while experts point to Pakistan's struggles with securing debt rollovers and additional financing as the primary issues. The turmoil surrounding the IMF negotiations has rattled financial markets and compounded the challenges facing Pakistan, which must address significant upcoming debt repayments.

Trump Approaches Potential Sale of Truth Social Parent Company Shares

AP News

Trump Media & Technology shares experienced a 17% decline in early trading following the recent debate between Donald Trump and Vice President Kamala Harris. The lockup provision preventing insiders from selling shares will expire on September 19, allowing Trump to sell approximately 115 million shares valued at about $2 billion, despite the stock's current worth being significantly lower than its debut high of $79.38 in March. The company, which operates the social media platform Truth Social, reported a loss of nearly $58.2 million last year against $4.1 million in revenue, highlighting ongoing financial struggles. Market dynamics indicate that the stock's volatility is influenced by individual investors, labeling it as a meme stock.

 📈 Stocks / Finance

Historical Stock Market Weaknesses Resurface in September and October

CNBC

September and October have historically exhibited weaknesses in the stock market, rooted in a pattern of financial panics that dates back to the 1800s, including notable events like Black Friday of 1869 and the Panic of 1907. The agricultural financing cycle contributed to these vulnerabilities as state banks withdrew capital from New York banks during harvest time, leading to cash shortages that heightened the risk of financial shocks. The Federal Reserve Act of 1913 aimed to address these issues by establishing a central banking system capable of acting as a lender of last resort, which improved market stability over time. However, despite the shift away from an agricultural economy, psychological factors may perpetuate the tendency for market declines in these months, as investors’ expectations can influence their behaviors, creating a self-fulfilling prophecy.

Berkshire Hathaway Reduces Bank of America Stake Below 11% Amid Ongoing Share Sales

CNBC

Berkshire Hathaway has significantly reduced its holdings in Bank of America, selling over $7 billion worth of shares since mid-July, and decreasing its stake to 11%. The latest transactions involved the sale of 5.8 million shares for approximately $228.7 million, marking the twelfth consecutive session of share sales. This selling streak has seen Berkshire divest a total of 174.7 million shares, leading to a decline in Bank of America’s position in Berkshire's portfolio from second to third, now behind Apple and American Express. Bank of America CEO Brian Moynihan acknowledged the uncertainty surrounding Buffett's selling strategy, emphasizing that the market continues to absorb the shares despite the divestment.