September’s seasonality

On Friday investors closed the books on the month of August, just ahead of the long Labor Day weekend, and this marks the unofficial end of summer on Wall Street. A number of the market indexes I track traded at or near all-time highs on August 29. What can we expect from US equities over the coming month?

screen-shot-2014-09-01-at-7-01-44-pmHistorically the S&P 500 has been weak in September — a softness in performance that’s often accompanied by an uncomfortable uptick in volatility. Check out the chart to the right from Bespoke for a monthly performance comparison over the past 20, 50 and 100 years (click to enlarge).  It’s not just the S&P 500 displaying this seasonal pattern. The Stock Market Almanac reports that “Since 1950, September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971) and Russell 1000 (since 1979).” Gulp.

However, before you make a mad dash for the exit door, keep in mind that August is another typically lousy month for US stocks and yet the S&P 500 just posted its best August return in 14 years. Performance data below is also courtesy of Bespoke.

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦











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