Hard to believe, but we are in August already! The good news is stocks are still firmly in a bull market, but the bad news is the calendar is a potential worry now. As shown in the LPL Chart of the Day, August and September have been historically two of the weakest months of the year. In fact, during a post-election year, August has been historically quite poor, with only February worse on average. Turning to September, it has indeed been historically the worst month of the year on average. Don’t forget that last year stocks saw nearly a 10% correction during this troublesome month.
Taking this a step further, stocks tend to peak in early August when a new party is in power in the White House. August 6 is the day stocks peak and they don’t bottom until September 25.
Meanwhile, during a post-election year stocks peak on August 3 and bottom on September 24. Again, showing how the next several weeks potentially can be dangerous.
It isn’t all bad news though. With the economy rebounding and earnings soaring, should we see any seasonal weakness, we’d use that as an opportunity to add to core equity positions. “The S&P 500 is up an incredible six months in a row,” explained LPL Financial Chief Market Strategist Ryan Detrick. “What most might not realize is that is a very bullish event. In fact, one year later it has been up 18 of 21 times with nearly a 12% average return. The bull might have a few tricks up his sleeve yet.”
Look for our latest Weekly Market Commentary out later today as we dive more into events that could move stocks in August.
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