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S&P 500 Seasonality and the Dog Days of Summer

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The chart below shows the seasonal tendency for the S&P 500 over the last twenty years (1998 to 2017). The number at the top of each bar shows the percentage of months the S&P 500 advanced for that particular month, while the number at the bottom shows the average gain/loss (percentage) for that month. For example, the S&P 500 rose 55% of the time in June and the average gain is actually a loss (-.5%). 


These numbers further reveal that the next three-month stretch was the weakest three-month stretch over the last 20 years. First, the S&P 500 advanced less than 50% of the time in July and September (47% each). These are the only two months below 50%. The S&P 500 advanced just 53% of the time in August, which is the fourth lowest reading. Taken together, the average of the last three months is 49% ((47+53+47)/3=49) and this is the lowest of any three-month stretch.  

The average gain/loss at the bottom of the chart reinforces the negative bias for the next three months. The average loss for the S&P 500 is -1.1% in August and -.90% in September. These are the two biggest negative numbers on the histogram. Further more, the sum of the last three months is the lowest of any three month period (+0.3% + -1.1% + -0.9% = -1.7%). History does not always repeat itself, but the historical tendency is clearly negative over the next three months. Might be a good time to go fishing!  

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at StockCharts.com. He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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