Summary

The calendar turned to September, historically the worst month of the year, and all of a sudden things go to heck and in a handbasket. Yet again, the largest drag on the stock market was the heavily weighted Information Technology (XLK -4.6%) sector. The group was once again dragged down by once-beloved semiconductor stocks, as the major semi indices getting pulverized by 7% to 8%. Since July 17, the iShares Semiconductor ETF (SOXX) and the VanEck Vectors Semi ETF (SMH) have dropped at least 6% on three different days. All three of those days featured very heavy volume, a clear sign of institutional distribution. We started to see distribution on the semis and the Nasdaq 100 (QQQ) back in the middle/latter part of July. Most of the major semi stocks have lost their 50-day average for the second time since late July, while a handful are breaking below their more-important 200-day averages and are closing in on their initial lows from early August. The QQQ cratered 3.2%, broke down out of a developing bull flag, and closed near a 38.2% retracement of the rally since the August 5 intraday low. We did see a minor 5/13 exponential moving average crossover sell signal, reversing the buy sig