Stock Market seasonality is an interesting topic.  There are well documented seasonal tendencies in the Stock Market that have proven to be statistically credible over the years.  September is the worst performing month of the year, although this year has seemingly been countering that trend.  The DOW is up 1.8% for September at market close today 9/25 with three trading days remaining.  The market has been retracing the last three days and it may continue through the end of the month.  Even with a pull back, this September has been quite remarkable from a historical perspective.

After considering September’s performance as it relates to historical trends, I decided to revisit some of the other more visible seasonal tendencies.  So here they are.

1.  The top performing months from 1926 – 2004 in the S&P 500 are January, April, June, July, August, November and December.*
2. One of the most recognized performance trends is the retail months of November and December with the holiday season.
3. Dove tailing on the retail season is the January Effect with institutional investors moving into primarily small cap and value stock to begin the New Year. **
4. Monthly timing can be rewarding.  Again, institutional money flows into stocks in the final few days of the month and continues into the first few days to a week of the new month.
5. You may have already discovered that Mondays almost always have the blues and underperforms while Fridays post the best returns.
6. Finally, trading sessions just prior to extended holiday weekends tend to be bullish.

There are many other seasonal tendencies that warrant attention.  You can use this knowledge to time your entries and exits to profit.  This brief commentary is only meant to whet your appetite to explore this area further.  Best, Robin

*Ibbotson & Associates

**Jeremy J.  Siegel “The Definitive Guide to Financial Market Returns and Long – Term Investment Strategies”

Primary Source:  Investopedia Article “Capitalizing On Seasonal Effects”  Author, Derek Polcyn.

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