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,
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.
Dow Jones Industrial Average DJIA,
and Nasdaq Composite Comp,
All are on their way to finishing a little less.

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