Two the Point — The Worst Month of the Year for Stocks

We don’t put a great deal of emphasis on “seasonality”, but September is historically the worst month of the year for stocks with an average return of -0.5%. 
For months we’ve discussed the likelihood that the recent move higher in stocks was nothing more than a “bear market rally.”  The S&P 500 continues to trade below its 200-day moving price average (a key technical level watched by investors), and recently failed to overtake that level before falling over 7% in the past two weeks.  
This is important because if the S&P 500 is trading below its 200-day moving average heading into September, the historical performance is typically even worse.  As seen in the chart below, there is a clear difference between September returns when stocks are in a downtrend (trading below the 200-day) versus an uptrend (trading above the 200-day). 
Although the reason why September is typically the worst month of the year isn’t totally clear to us, this seasonal pattern taken together with our assessment of market fundamentals makes us believe we may be in for yet another volatile start to the fall season.
Source: Strategas Research Partners