October 7, 2022

Considering historical trends, September has been a tough month for US stocks so far.

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What history says about September and the stock market running out of steam after the summer boom

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But as the main US benchmarks are already offsetting monthly losses of more than 2% as of Monday, there is reason to suspect there could be further pain – especially with another jumbo interest from the Federal Reserve. The rate is expected to increase by the end of this week.

To wit, Bank of America Bac,
+1.67%
Technical research strategist Stefan Suttmeier pointed out in a recent research note that “weather data from 1928 show that the last ten days of the month are weaker than the first ten days of every month except December.”

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What’s more: “September is the only month with negative averages and media returns in the first and last ten seasons of the month.”

Suttmeier showed in a chart that the S&P 500 has seen an average fall of more than 1% during the last ten trading days of the month.

To offer an even more accurate breakdown of historical trading patterns, Suttmeier shared a second chart showing average returns for each day of each month. Looks like an uninterrupted sea of ​​red in late September.

Source: Bank of America


In his note, the analyst also highlighted several other technical factors which do not bode well for the stocks coming in late September. First, a decline in the 200-day moving average suggests that the S&P 500 is back in a bearish trend. And if the S&P 500 sees a meaningful break below 3,900 — which could happen if the stock closes below that level again on Monday — the next support level is very close to lows since mid-June.

After another week in the red on Friday, US stocks are set to end lower with the S&P 500 SPX on Monday for the third consecutive session.
+0.69%,
Dow Jones Industrial Average DJIA,
+0.64%
and Nasdaq Composite Comp,
+0.76%
All are on their way to finishing a little less.

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