As of September 3rd 2021, stocks are at all-time highs and look to continue the bullish trend that has been consistent since the March 2020 lows. Except for the months of September and October 2020. In those months, the S&P lost nearly 10% of its value before continuing its tear. The Dow Jones was also down over 10% heading into the month of October of last year. Investors acknowledge the seasonal trend and historically it has shown to be the weakest stretch for equity benchmarks.
Federal unemployment benefits will be terminated as of this weekend and the central bank has signaled steps to begin the tapering process over the next few months. Less liquidity is another indication stocks can consolidate after the 7 month win streak it has been on since January 2021.
Despite the obvious reasons to be swayed from believing the streak will continue, some analysts argue that investors shouldn’t panic based on historical data. “Stock market lore is filled with correlations that are statistically significant but have no real-world significance,” Mark Hulbert of MarketWatch explains.
Blue-chip equities have remained on a steady tear, with Apple (AAPL) up over 200%since the March 2020 lows now staring at new highs. Paypal (PYPL) is up over 200%as well, along with Starbucks (SBUX), Shopify (SHOP), and Tesla (TSLA) stock being up anywhere between 150-1000% since the March 2020 crash. The list goes on but onehas to wonder where the rally could see a stop sign.
Whichever way analysts choose to put things, September has historically shown an average decline of -1.1% for the S&P 500 since 1928 which is enough to make investors cautious at the minimum. Add that along with the 7 month winning streak the market has been on, the more prevalent delta variant of COVID-19, and the FederalReserve’s indications that the tapering process will begin very soon, and there is a recipe for a choppy September and possibly fall season heading into October.