The September Song sung by the media is that September is the worst month of the year for stocks. But before the readers jump in to short the market (especially after September's poor start), there are a few reasons to beware:
Previous columns have mentioned the Ned Davis Research chart of Presidential Election years, where the market has risen each of the 28 times in September, whether the Incumbent wins, loses, or is termed out. Only in October is the divergence wide, where, if the Incumbent is to loses, the market tanks from October 1 until the year end, while the other scenarios all receive strong markets, per usual.
Recently option maestro Larry McMillan noted that his equity put/call ratio, featured each week in Barron's, showed a Buy signal, as did the AAII Bear surveys- like only 4 times in the past 15 years. He also uses the VIX futures - VXX for market direction. Elsewhere, Michael Carr of the Trading Authority uses a technical oscillator - the Williams% (much like Stochastics upside down)- coupled with Bollinger Bands 2 standard deviations, to get a Buy signal.
Like all probabilities, however, there is always the percent that doesn't work - like Dirk Nowitski of the Dallas Mavericks basketball team missing a free throw. There are lots of fundamental and economic events coming out this month, such as the important Fed meeting next week, which could jerk the market around, now that the HFT traders are back.
Investment meetups this month include a tricky date for the San Francisco Bay Area Options Group at Fort Mason. Normally they are held on option expiry Saturday - the Saturday following the third Friday of each month. However, this month the third Friday falls on the 21st, but the meeting is to be held on the 15th.
The Silicon Valley Options Group meetup is on the second Thursday - the 13th, although a special event put on by TDAmeritrade is on the 29th in San Jose. See firstname.lastname@example.org
Benevolent & Protective Order of Elks, Lodge #2128
375 N. Pastoria Avenue
Sunnyvale, CA 94085-4110
Directions & Map: http://tinyurl.com/ElksLodgeSunnyvale
2nd Thursday of every month
6pm to 9pm