Historically, on average, September has been the worst month of the year for the S&P500$S&P 500(.SPX)$ (returns were -0.5% on average, and positiveonly 47% of the time).
So there are a few things to comment on around this. First of all, 47% is pretty close to 50/50 — albeit it does stand in contrast to some of the other months which were in the 60-70%+ range.
Second, September *did not* have the worst drawdown, OR the smallest upside, and it did not have the greatest dispersion of results either.
But one thing I will note, when I look at seasonality across different asset classes and markets (also looking at the seasonality of asset class relative performance), it is this Aug-Oct period of the year which is generally the worst for risk assets.
Typically we see defensive assets outperform this time of the year (e.g. gold, bonds, defensive equities), while risk assets lose ground (VIX$Cboe Volatility Index(VIX)$ , credit spreads go up, and equities go down).
Seasonality is interesting because it definitely is a thing - statistically, and it is often influenced by physical seasons, actual fundamentals and real life patterns of activity.
But it shouldn’t be the first thing you look at. I always say,put together your core thesis first, and then look at secondary/third-tier factors like this to round out the case or build conviction.
Of course in this instance, I would say that negative seasonality does gel with the generally weak backdrop, so I wouldn’t be inclined to go against it in the current backdrop, and would at the margin travel a little more cautiously.
https://chartstorm.substack.com/p/weekly-s-and-p500-chartstorm-4-september
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