Jeff Hirsch is editor-in-chief of The Stock Trader’s Almanac, Commodity Trader’s Almanac, and Almanac Investor eNewsletter. He started with the Hirsch Organization in 1990 as a market analyst and historian under the mentorship of his father, Yale Hirsch. Mr. Hirsch regularly appears on major news networks such as CNBC, CNN, and Bloomberg, as well as writes numerous financial columns. He has a free seasonality blog at http://blog.stocktradersalmanac.com.
By Jeffrey A. Hirsch & Christopher Mistal
Dow’s September performance has been impressive thus far, gaining 5.3% and ranking third best since 1901. With just eight of September’s 21 trading days completed, September’s seasonal tendencies are already being dismissed. Yes, September is historically the worst month of the year with an average Dow decline of 1.2% since 1917, but September is not always down.
However, nearly every September since 1917 (except 1954, 1964, 1968 and 1973) has had a correction with an average loss of 4.5%. As the market trends closer to the upper end of its trading range, near resistance, and signs of an overbought market continue to strengthen, the likelihood of a typical September correction is also increasing.