I have written in the past about the “dangers” of September (see here and here) and a lot of investors are aware that it has historically been the worst month of the year for the stock market overall. But the truth is things can vary a lot from year to year – except for this week. This week – defined as the week after the 3rd Friday in September – has been pretty awful pretty consistently for a pretty long time. As you may gather, no, it has not been pretty.
Two of my favorite analysts – Wayne Whaley of Witter & Lester and Rob Hanna of www.QuantifiableEdges.com both made light of this recently. The bottom line:
*The week after the 3rd Friday in September has seen the S&P 500 decline in 24 of the last 30 years.
Being the numbers geek that I am I went back to the start of my own database in 1928. I found that in the prior 31 years this week was up 14 times and down 17 times.
While at first blush this “doesn’t sound as bad”, the reality is that given the magnitude of the overall market advance since 1928, that this particular week is so consistently NOT bullish is downright dismal. Especially when we consider the magnitude of the ups versus the downs and the overall long-term trend.
The Numbers
Since 1928, the week after the 3rd Friday in September has seen the S&P 500 Index:
*Advance 33 times
*Decline 54 times
*Unchanged once
*Average gain = +1.64%
*Average loss = (-2.04%)
Figure 1 displays the cumulative % +(-) achieved by the S&P 500 Index since 1928 during the week after the 3rd Friday in September.
Figure 1 – Cumulative % return for S&P 500 Index ONLY during week after 3rd Friday in September
Figure 2 displays the year-by-year results.
Figure 2 – Week after 3rd Friday in September Year-by-Year % +(-)
September “Hell Week” for 2020 is off to a pretty dismal start. Will things improver anytime soon? It beats me. But I am of the mind that during September and October “anything can happen” so investors should be prepared. I am also of the mind that starting in November the bullish trend will re-assert itself.
Here’s hoping.
On a slightly separate note – even a down September is not totally without value thanks to the “September Barometer” (see here and here).
See also Jay Kaeppel Interview in July 2020 issue of Technical Analysis of Stocks and Commodities magazine
See also Jay’s “A Strategy You Probably Haven’t Considered” Video
See also Video – The Long-Term…Now More Important Than Ever
Jay Kaeppel
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