According to Wall Street folklore, investors can expect results for September to turn out like the first trading day of the month.
It is not clear if that will happen this time. But if you'd like it to be true, you had better hope it applies only to the first trading day.
Tuesday - the first trading session of the month - was a pleasant day as the Dow Jones industrial average climbed just over 91 points and investors held onto the courage they mustered just before Labor Day, when they began imagining the Federal Reserve would soon wave a magic wand and sprinkle the economy with the life-giving power of lower interest rates.
But by Wednesday, the old fears that sent the Dow down about 5 percent from July 19 to the end of August returned. The Dow dropped about 1 percent, or more than 143 points, as the housing recession turned uglier and the outlook for job growth weakened. On Friday, the Dow fell nearly 250 points on a weak employment report.
Investors are flopping around in reaction to each day's economic reports.
At the root is fear - fear that a credit crunch will make it difficult for businesses and consumers to borrow the money needed to keep the economy growing, and also fear that the pressure of unaffordable monthly mortgage payments and dropping home prices will strip consumers of their buying power.
Uncertainty and fear can be poison for an economy.
"The difference between having a weak economy or a recession is fear," said Mark Zandi, an economist for Economy.com.
One of the greatest threats now, he said, is that businesses will lose faith that people will buy products, or see the threat of a credit crunch, and stop hiring or lay off workers.
Watching for the signs can be a dizzying occupation for investors. But Zandi said investors who want to be early in spotting weaknesses that could disrupt their investments should keep an eye on two simple indicators: confidence and jobless claims.
Most indicators suggest that the economy is sound. But what can shake that, with so much uncertainty hanging over the future, is confidence, Zandi said. People and businesses lacking confidence about the economy, or their own financial condition, delay purchases.
Zandi suggests investors monitor the National Federation of Independent Business survey of small-business economic trends at www.nfib.com/page/research Foundation. Pay attention to the optimism index. It has been below 100 most of the year, suggesting subpar growth. The latest index, for July, was 97.6.
"If it's below 90 in August and continues to stay down, business may be losing faith and will rein in their expansion plans and cut workers," Zandi said.
For consumer confidence, the most timely barometer comes from the ABC/Washington Post Consumer Confidence survey. The latest report reflected serious unease. The index dropped further than it has ever fallen: 9 points, to minus 20 from minus 11. The range is minus 100 to plus 100.
"If it falls by the same amount next month, that's a problem," Zandi said. "Generally, if confidence falls two months in a row, it means consumers will pull back."
Jobless-claims numbers show how many people have filed for unemployment benefits.
The claims have risen in recent weeks, which means people are losing jobs.
"These data should be watched closely," Merrill Lynch strategist Richard Bernstein wrote. "A significant increase in jobless claims would surely signal that the front end of the U.S. economy (and the global economy, for that matter) are starting to weaken more than has been anticipated."
Gail MarksJarvis writes for Tribune Media Services.