September Weakness?

Adding trend into the analysis shines a different light

September 5, 2017

Oppenheimer & Co.’s Ari Wald suggests September could not be that bad for the S&P 500 even though this month historically ranks as the worst for stocks.

“We’ve found S&P 500 returns during the month of September haven’t been as negative as advertised when the direction of the index’s trend is also incorporated into the analysis,” Wald writes, offering the chart below.

His analysis found that returns have been slightly positive in September when the S&P starts the month atop its 200-day moving average, a closely watched chart level that the benchmark has held above throughout this year.

“Although September returns in an uptrend are still below the all-period average,” the technical analyst adds, “we think stocks should be bought in anticipation for the next leg of the advance because our near-term indicators are inflecting positively from an oversold condition.”