Good morning,
Tuesday marks the first day of September and there will undoubtedly be a barrage of headlines about how September is the worst month of the year for stocks.
For the S&P 500, it has been in all years since 1950 (-0.6%), though it’s actually only the third-worst in mid-term years (-0.8%).
However, that’s not a reason alone to be bearish, as I answered in a recent Mailtime question. And, I would argue, the most important takeaway from seasonality is that any weakness in September is historically the best time to buy, as October kicks off the best three-quarter stretch of the Presidential Cycle.
All that said, I do see some signs that September could present such a buying opportunity.
A few reasons to not be surprised by a pullback:
There has been subtle defensive leadership over the past three weeks
Rates are breaking out, with the 5-year yield surging to its highest level since January 2025
You have an obvious catalyst with the Fed decision and a potential hike coming on September 16
The trend doesn’t support positioning net bearish, and that’s been an important harbinger of whether September delivers on its infamous reputation. But this week could offer an important clue to tactical investors as a number of key groups and sectors are sitting on important trend lines. Breaks, and I think it’ll be a good sign that investors shouldn’t be out over their skis and will want to have some dry powder to put to work later in the month or closer to the midterms.
This week’s report will review:
Key support on the S&P 500
Technology technicals following a big earnings week
September seasonality
Uptrend support on recent leadership groups
Headwinds from the industrial and infrastructure theme
Rates and Fed fund futures
Bitcoin
and more!
