"You will never do anything in this world without courage. It is the greatest quality of the mind next to honor." -- Aristotle

Here I Stood and Looked Down

The first day of September. Here we stand. After what seemed like a tough month, most of our broader equity indices have recovered to close out the month near enough to all-time records. Sure, the S&P 500 slipped 0.24% for the month, but it had been more than 2% lower only about 10 days ago. Then there's the tech-laden Nasdaq Composite. Also down more than 2% earlier in the month, this index actually gained more than 1% for August. Now, we head into what are, more often than not, the roughest two months of any trader's calendar year. September can be subject to price erosion. In fact, going back over a 90-year window, the S&P 500 gives up an average of 1.1% for the month.

October may have the bad rep (This two-fisted kid ran a trading booth in the NYSE's main room for Pershing back on Oct. 19, 1987), but outside of a few catastrophic events, October is close to being an average month. Over those same 90 years or so, October returns for the S&P 500 average a positive 0.5%. For those market historians who are about to call me out on S&P 500 history, I am well aware of the fact that the S&P 500 was created in 1957. The index now known as the S&P 500 was referred to as the "Composite Index" prior to that, and contained 90 stocks. That earlier version of the index is included in my window here.

I've Got No Time to Mess Around

I am getting a little (a lot) sick of the crowd I see on television and hear on the radio every day. They are afraid to take a stand. What they do is tell you why you should be cautious, trying to say as little as possible. Heaven forbid they make a mistake. Show some courage, man. Why should you run scared from the marketplace? Why should you play defense?

Of course you should play defense, gang. It's your money. Of course you are going to defend yourself. Why wouldn't you play it as smart as you can? Enough with the "Chicken Little" act. We know North Korea presents geopolitical risk. Geopolitical risk also presents opportunity. We know that the president can be sloppy, that he presents political risk. Guess what, gang, that means his entire agenda has yet to be priced in. More opportunity, that's what. Anyone else notice the earnings expansion that we've seen over the last four quarters, particularly the last two? Anyone else notice the weak U.S. dollar? The still low interest rate environment? The still serious lag on consumer level inflation? Know what? I want to buy stocks when you have low inflation, earnings expansion, and economic growth all at the same time. That's what. Get some. I'll defend myself, thank you.

Who is going to listen to some talking head who has been whining about historical valuations for years now on television? Will they be right some day? Of course, but if some of these guys were really trading, they'd be out of business by now. Nobody shorts a rising market forever without repercussion.

Will tax reform get passed soon?
Will tax reform get passed soon?

That Said

Yesterday's moves and the moves seen over the last three days in general have been aided by the month-end portfolio rebalancing. Further positive movement on Friday would be highly encouraging, though some of the real players may not return until next week. Volume will remain light. Keep in mind that the S&P 500 was repelled at 2475 yesterday, just about where it was supposed to hit some trouble, and that the index spent much of the last two days in technically overbought territory.

There may be some early-morning volatility regarding equity prices, coming off last nights' run. I would expect that there would be an effort to get flat non-core positions by many decision makers going into the three-day weekend. Could provide the fearless with a trade-able situation, if you're not a chicken.

The Beginning of the End of Bitcoin?

The news story of the day yesterday may have been that several international banks were teaming up to join a project created by UBS Group AG (UBS - Get Report) to form a new digital currency that will (like other forms of cryptocurrency) clear and settle through block-chain technology. Big names like Barclays (BCS) , Credit Suisse (CS - Get Report) , HSBC Holdings (HSBC) and others have joined the effort. UBS thinks that can kick-start this thing in a limited way toward the second half of 2018. That's interesting.

The new coin, known as the "Utility Settlement Coin" will -- if developed as planned -- allow financial firms to pay for stocks and bonds without waiting for traditional money transfers to be completed. We all knew that somebody would notice that Bitcoin had become a threat to the way business was done, and either try to muscle their own way into the space, or muscle existing cryptocurrencies out. The questions in my mind, at this point, are plenty. For one, when do the planet's largest central banks get involved? Those controlling money supply in reserve currencies have much power to lose if they do not defend themselves. My guess is that when they feel that they need to, defend themselves they will.

Does that mean some kind of cooperation with the likes of what we see developing here, or does it mean the elimination of? It is no secret that blockchain technology is thought of as safer than systems currently in place. How disruptive will the central banks allow this technological shift to be? Heck, I don't know. I do know that I am glad that I am long Nvidia (NVDA - Get Report) . You may or may not have listened when NVDA CEO Jensen Huang said in the earnings call earlier in August that the cryptocurrency boom was sustainable. Advanced Micro Devices (AMD - Get Report) has been the recent competition in this space. These are two chip makers who are currently the leading miners in this field. The dominance of the semiconductors as a group is going nowhere, as long as chips are needed to mine blockchain. Then we can talk about artificial intelligence, machine learning, video games, autonomous driving, and every other currently pertinent technology business line under development.

All over for Bitcoin?
All over for Bitcoin?

Oh, and It's Jobs Day, Gang

08:30 - Employment Situation (August)

Non-Farm Payrolls: Expecting 179,000, July 209,000

Average Hourly Wages: Expecting 2.6%, July 2.5% y/y.

Average Workweek: Expecting 34.5, July 34.5 hours.

Participation Rate: Expecting 62.9%, July 62.9%.

Unemployment Rate: Expecting 4.3%, July 4.3%.

Underemployment Rate: July 8.6%. I have listed these in the order of potential impact to the marketplace. I think it very possible that you could flip number one and number two, as wage growth will certainly be under significant focus in today's report, as will the average workweek, which is a tertiary measure of demand for labor. The significant upside beat for job creation reported by ADP on Wednesday is the reason that non-farm payrolls still top this list. The participation rate has been steadily improving of late, and traders do look at it. Neither the unemployment rate, nor the underemployment rate garnishes much attention at this point in the development of the U.S. economy. Not that these measures are completely irrelevant, but both are considered to be artificially low by most in the financial community, due to the exclusion of the long-term unemployed.

Meanwhile, here comes another hurricane...

Other Macro

All Day -- Total Vehicle Sales (August): Expecting 16.6 million, July 16.7 million annualized. These annualized monthly numbers being posted by the auto manufacturers would not be so bad, say, before 2016. That said, the five worst months for auto sales in the last 13 have come in the last five months. I imagine that August auto sales will take an overt hit with the area surrounding the nation's fourth largest city in terms of population going through what it as gone through this week.

09:45 -- Markit Manufacturing PMI (August-rev): Flashed 52.5. This item disappointed last Wednesday when the flash number missed headline expectations rather badly. No matter, traders do not follow Markit data, especially when ISM data follows.

10:00 - ISM Manufacturing Index (August): Expecting 56.5, July 56.3. New orders, backlogged orders, and production have all remained strong to very strong as far as U.S. manufacturing is concerned. Much of the demand that is driving this resurgence in U.S. manufacturing is being driven overseas. The weaker U.S. dollar has been pivotal for much of the recently improving U.S. macroeconomic picture, not to mention equity prices.

10:00 - Construction Spending (July): Expecting 0.6%, June -1.3% m/m. Though released with something of a time lag, this series should actually wait longer. Famously inaccurate in its initial release, the Census Bureau is usually forced to significantly revise this print a month later. There are two things we can be fairly sure of. One, it doesn't matter what this release says was spent on construction in July, and two, that June contraction (-1.3% m/m) will likely look different at 10:01. Next.

10:00 - U of M Consumer Sentiment (August-rev): Flashed 97.6. The mid-month preliminary release wildly beat the high end of expectations two weeks ago. There is, however, a caveat. The report itself claims to have interviewed too few people in the wake of the events in Virginia earlier this month. Therefore, I would not be surprised to see a more significant revision to this item in the month's final release than usual. Given the unexpected pop, one might expect the revision to be southerly. Keep in mind that the similar consumer confidence survey, which is conducted by the Conference Board, did decisively beat to the upside on Tuesday. This one is a wildcard, and could impact the marketplace.

13:00 - Baker Hughes Rig Count (Weekly): Last Week total 940-6, oil 759-4. We are seeing a reduction in both oil and gas producing rigs, even without the impact of Hurricane Harvey. Of that reduction of four oil producing rigs last week, three were in the state of Texas, but that was really either a product of WTI market conditions, or preliminary shutdowns ahead of the storm. This number will be of great interest, and will impact both the commodity and the equity space.

Sarge's Trading Levels

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2491, 2484, 2475, 2469, 2461, 2454
RUT: 1421, 1415, 1407, 1400, 1393, 1387

There are no significant earnings releases scheduled for today.

Get Morning Recon delivered directly to your inbox each market day. Click here to sign up for e-mail delivery of Stephen "Sarge" Guilfoyle's Morning Recon, Jim Cramer's Daily Booyah! or other great free newsletters from TheStreet.

More of What's Trending on TheStreet:

At the time of publication, Stephen Guilfoyle was long NVDA, although positions may change at any time.