September Almanac, Vital Stats & Calendar: Back to School, Q3 House Cleaning, Worst Month Since 1950 By: Christopher Mistal & Jeffrey A. Hirsch | August 25, 2015 | Email | Print

 

Although the month has opened strong in 13 of the last 20 years (a fading trend as S&P 500 has been down five of the last six first trading days), as tans begin to fade and the new school year begins, fund managers tend to sell underperforming positions as the end of the third quarter approaches, causing some nasty selloffs near month-end over the years. Recent substantial declines occurred following the terrorist attacks in 2001 (DJIA: –11.1%), 2002 (DJIA –12.4%), the collapse of Lehman Brothers in 2008 (DJIA: –6.0%) and U.S. debt ceiling debacle in 2011 (DJIA –6.0%). However, September is improving with S&P 500 advancing in eight of the last 11 Septembers and DJIA climbing in seven.

 

September Triple Witching week is basically 50/50 with gains slightly more often than not, but is has suffered many large losses. DJIA, S&P 500, Russell 1000 and 2000 have recorded gains on Monday of expiration week for three straight years 2009-2011. NASDAQ has been down three straight years since. Triple-Witching Friday has been firm the past ten years with every index advancing at least eight times. The week after Triple Witching has been brutal, down 21 of the last 25, averaging an S&P 500 loss of 1.1%. In 2011, DJIA and S&P 500 both lost in excess of 6%.

 

In recent years, Labor Day has become the unofficial end of summer and the three-day weekend has become prime vacation time for many. Business activity ahead of the holiday was more energetic in the old days. From 1950 through 1977 the three days before Labor Day pushed the DJIA higher in twenty-five of twenty-eight years. Bullishness has since shifted to favor the two days after the holiday as opposed to the days before. DJIA has gained in 14 of the last 21 Tuesdays and 16 of the last 21 Wednesdays following Labor Day.