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The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.
Sunday, September 05, 2010
Will this September be different?
HOME > STOCKS The Most Punishing of All Market Months (October? Think Again) Will September Live Up or Down to Its Past?
Most investors know that famous stock market crashes have struck in October: 1929 and 1987 immediately come to mind.
Some may recall the "mini-crash" on Friday the 13th in October 1989. More recently, the Dow Industrials lost 18% the week of October 6, 2008.
All of that said, October is not even the second-worst month for stocks (it ties for fourth-worst with June).
More than 100 years of data show that the worst month for stocks is September.
Mark Hulbert of MarketWatch recently noted that since 1896, the average gain in the Dow Industrials in September is -1.2%, which underperforms all other months by far. The Stock Trader's Almanac also reports that September is the month when the leading U.S. stock indexes perform most poorly.
Of course, historical averages are no guarantee that this September will be the worst month of 2010. But realize this:
"The stock market continues to work lower, with declining legs unfolding...Momentum is set up to fall again with stocks."
August 20, Short Term Update
So with the above analysis in mind -- and considering that the worst average month for stocks is just days away -- may we suggest that it's wise to be prepared for this September before it arrives.
History and the Wave Principle alike are saying, "Look, look -- pay attention to this!"