Where did the expression “Dog Days” of summer originate?
The Dog Days refer to the hot and sultry days of summer that are not fit for a dog. It is the time of the year when extreme heat drives dogs and humans mad.
The Dog Days of summer start on July 3rd and end on August 11th every year, coinciding with the hottest time of the summer season.
So, where did the term come from, and why the reference to dogs?
According to the Farmers’ Almanac, it is all about the stars. The popular expression refers to Sirius, part of the Canis Major constellation. During this time of excessive heat and high humidity, the Sun aligns in the sky with Sirius, the Dog Star.
During the summer months, Sirius rises and sets with the Sun. On July 23rd, Sirius is in conjunction with the Sun, creating a star so bright the ancient Romans believed Sirius caused the oppressive heat. The ancients referred to this period as dies caniculares or dog days.
The Dog Days of Summer are the 20-days before and 20-days after the alignment of Sirius with the Sun from July 3-August 11.
We know the Dog Days of summer are not associated with the extra heat or radiation from Sirius. Extreme weather is because the Earth’s tilt causes the Sun’s rays to hit Earth at a more direct angle and for longer than other months.
What do the Dog Days of Summer mean for the stocks?
With only four-plus months left in the year, the stock market has experienced both hot and cold spells as depicted by vicious declines followed by explosive oversold rallies.
It would appear traders and investors are not as bothered by the heat during the dogs days of summer but by the uncertainties surrounding geopolitical, macroeconomics, corporate earnings, and Fed actions.
As the Dog Days of Summer end in a few weeks, will investors return to drive the market higher or stay away until fall?
The SPX Index rally from the 6/17/22 low of 3,636.87 is the fourth oversold rally this year. SPX has gained 508.58 points or 13.98% over the past 29-days. An impressive feat, nevertheless, given another 75 basis-point rate hike from the central bank, continued inflation fears, and persistent turmoil in Europe and Asia.
SPX nears another inflection as it challenges formidable resistance at 4,200-4,300. The resistance zone coincides with numerous technical convergences, including 10/4/21 and 1/24/22 lows or neckline breakdown, 5/4 and 6/2/22 reaction highs, the 50-61.8% retracements from the Mar-Jun 2022 decline, and the 7/20/22 ascending triangle breakout projection.
The ability to clear 4,300, coupled with a convincing move above the 200-day ma (4,343) and the top of the Jan 2022 downtrend channel (4,374), reverse the primary downtrend and suggests a retest of its all-time high (4,818.62 - 1/4/22).
Initial support rises to 3,929-3,946, corresponding to the 7/20/22 breakout and the 50-day ma. Below this warns of deeper consolidation to 3,788-3,817 (7/15/22 gap-up and bottom of ascending triangle), 3,721.5 (7/14/22 higher-low), and 3,617-3,637 (bottom of Jan 2022 downtrend channel and 6/17/22 reaction low). A breakdown confirms the next SPX selloff to 3,200-3,400.