David Sterman

We generally stand by a simple rule at StreetAuthority: Find great companies and tune out the market noise. The nation's top companies deliver shareholder value on a consistent basis, which puts them among the best candidates we know for the buy-and-hold investor.

But it still pays to heed the rhythms of the stock market. There are moments when clear potential headwinds are in place, which can slightly alter your shorter-term moves. At a minimum, such times should lead you to rethink any moves to add even greater exposure to stocks. 

This coming month may prove to be one of those times.

September presents a series of challenges and depending on your timeframes and investing strategies, discretion may prove to be the better part of valor for stock pickers. 

At first blush, an upcoming set of meetings by the Federal Reserve's Open Market Committee (FOMC) is this month's only major event. The meetings, scheduled for the third week of September, may yield a major change in Fed policy. That's when the Fed may seek to begin winding down its massive economic stimulus program, known as quantitative easing (QE). 

Since many market strategists attribute much of the impressive 40% gain in the S&P 500 over the past two years to the QE program, there is a good chance that the market could suffer a hangover once the Fed takes the punch bowl away. 

Yet it's a series of other events that surround the all-important Fed meeting that could also roil the markets. For example, on Friday, Sept. 6, the Bureau of Labor Statistics will release the monthly employment report. You can be sure the members of the FOMC will give this report a very close read as they decide the Fed's next move. 

Simply put, if the U.S. economy created more than 150,000 jobs in August (which appears quite feasible, considering 160,000 jobs were created in June and 227,000 jobs were created in July), then most Wall Street strategists will likely conclude that the Fed will be set to start "tapering" its current massive stimulus program at that next Fed meeting. 

Looking ahead to the middle of the month, just days ahead of the Fed's decision, we'll also get a look at:

  • The Empire State Manufacturing Survey (Sept. 16)
  • Monthly figures on industrial production (Sept. 16)
  • Redbook retail sales (Sept. 17)

David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com