Sector Seasonality and the S&P 500 – Worst Month of the Year – Back to School
September and sector seasonality tends to be the the worst month of the year for investors and traders alike. The S&P 500 was higher only two of the last five years during this period. The big cap index rose in 2013 and 2017, with 2014 and 2015 trading sideways to slightly lower.
September Seasonality
September Seasonalty – 2014
As an example, during the period September to October of 2014, the SPX suffered a 10% drawndown (-9.86%). This pullback resulted from the Africa Ebola scare spilling over into the United States.
Technically speaking, RSI was dropping or diverging from price in 2014. In winning years like 2013 and 2017 RSI was rising with price, as it is now. In addition, 2017 and 2018 show MACD rising, whcih leads us to believe there is a fair chance we could move sideways to higher during this time period.
Seasonality – Sector Performance
During the September 2014 Ebola scare, wise investors fled to Utilities and Consumer Staples.
At present, with momentum on the bullish side and more NAFTA news likely to hit the tape today, we are steadily reducing exposure by selling partial positions. If you were listening LIVE or have been paying attention to the alerts, you will note that we have been weeding the garden of non-performers over the past two weeks. We want to focus on fewer positions going into the fall.
At present, price action, breadth and market indicators are bullish. We have no sell signals at this time.
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Happy Trading,
Vinny
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