Beware the Ominous September… or not

Each year at this time, we hear the pundits roll out the ominous stats regarding the stock market’s performance for September. “It’s the worst month of the year.” “Be careful.” “Do some selling.”

Those sound an awful lot like “Sell in May and Go Away.”

The thing about compiling market stats is that over decades and decades the averages tend to really smooth out. Additionally, much depends on when you begin and end your study. Further, if you add enough qualifiers to the study, you can make the results give almost any message you want.

Historically, on average over the past 100 years, September has been a weak month with stocks peaking during the first week and selling off to a low in mid October. That’s fact.

Ari Wald of Oppenheimer added a twist to this data. He found that when the S&P 500 was above its 200 day moving average (long-term trend) to begin the month, stocks closed higher by roughly 0.40% versus a loss of 2.70% when price was below its 200 day moving average. For what it’s worth, the S&P 500 closed August well above its long-term trend.

What’s my take as we head into the final month of the third quarter?

As I wrote here last week, stocks look a bit tired and in need of some rest. That rest could come in the form of price declining 2-4% or enter a small trading to refresh.

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