Tuesday, September 29, 2015

Beat It, September!

The S&P 500 is down 4.5% in September as we head into tomorrow, the final day of the month.

According to Bespoke, if history is any indicator, the index is unlikely to see any reprieve as we close out the quarter.  Based on data going back to 1945, September 30th comes in as the 5th most negative calendar day for the market over that span.  Stocks have averaged a loss of 0.15% on that individual day over the 70 year period and the index has been negative in 50 of the 70 years.  Further, since this bull market began in 2009, the S&P has been down on September 30th every year (except 2012 when the 30th fell on a Sunday).

As we head into October, the market certainly looks to have its work cut out for it if it hopes to keep this losing streak from extending to 3 straight months.

Among other things, here's a sampling of the headwinds currently working against the bulls:  The VIX is still above 20, we have a potential government shutdown looming on the horizon, the Fed-speak we've been hearing has been more than a bit uneven and there's even talk that they missed their chance to raise rates, commodities are still in the toilet and they're weighing on stocks, we're still seeing the big up and down days in the indexes which indicates elevated fear, October will bring about an increase in mutual fund tax-loss selling, we're smack in the middle of the worst period of the year from a seasonality perspective, the Russell 2000 is now trading under its August lows, we've got one of the world's most visible investors warning of another crash in the making and the list goes on.

Almost makes you think that it's the perfect recipe for the market to be setting up for a big bounce here.  We're not going that far but we'll see...

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

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