The September Jinx: A Myth Waiting to Be Buried?

Ryan Detrick’s recent assertion on CNBC that the calendar looks worse than the market does has garnered attention in financial circles. As chief market strategist at Carson Group, Detrick’s analysis is always worth noting, and his take on the notorious September jinx is no exception.

The idea of a monthly curse is often used as a reason to trim exposure without much consideration for underlying conditions. This year, however, is different. The market has entered September with momentum, with the SPDR S&P 500 ETF Trust (SPY) up over 5% in the trailing month and 13% year-to-date. Volatility, measured by the VIX, is low at 15, far from the high-volatility months that preceded historically bad Septembers.

Detrick’s point about the conditions underlying the statistic is crucial here. September may be the worst month on average since 1950, but what does that really mean? Is it simply a product of weak markets that limped into previous Septembers? Detrick thinks so, and his analysis suggests that this year is not like those others.

A key indicator of market breadth is the percentage of stocks trading above their 200-day moving average. With nearly 70% of S&P 500 stocks trading above this line, Detrick argues that we’re seeing broad participation – exactly the kind of breadth that historically precedes strong months, not weak ones.

The 10-year yield at 4.67%, near its 92nd percentile over the past year, is often cited as a threat to equity valuations. However, Detrick’s argument centers on the market’s underlying conditions, rather than external factors like interest rates. This suggests that investors should focus on the fundamentals driving the market instead of relying on tired narratives about seasonal patterns.

Detrick’s analysis raises important questions about our understanding of seasonality and its role in investor decision-making. By examining the underlying conditions and rejecting the notion of a monthly curse, we can strip away some of the myths surrounding September’s reputation as the worst month for stocks.

If Detrick is correct – if this year’s market dynamics truly set it apart from those of previous Septembers – then investors would do well to rethink their strategies and focus on the underlying strengths of the market rather than relying on tired narratives about seasonality. The implications are significant, and a more nuanced understanding of what drives market performance could lead to more informed investment decisions.

Ultimately, Detrick’s analysis serves as a reminder that markets are complex and multifaceted, and we must avoid getting caught up in simplistic narratives. By examining the underlying conditions and rejecting the notion of a monthly curse, we can gain a more accurate and evidence-based understanding of market dynamics – one that may just bury the September jinx for good.