September seasons don’t shine

To watch in the coming month

The August seasons were a slump as the usual late-summer risk aversion pains never materialized, leading the usual laggards to outperform AUD / USD, cable and actions.

We’ll start from zero tomorrow at the beginning of September, but there aren’t many big clues in the monthly seasonal trends. The month of September is often dominated by the news flow as decision makers return from vacation, which dominates.

One asset recently struggling in September is gold. It has fallen an average of 1.16% over the past 10 September, including declines in six of the last seven.

seasonal patterns in gold

Fundamentally, I wrote about Republicans’ increasing chances of holding the Senate, something that will bring fiscal discipline back into the American equation, something that would undermine the gold.

A strong trade in September tends to be natural gas as it begins its three month period of strength. It has averaged a gain of 7.05% in September over the past 10 years. This does not include the 62.6% rally in September 2009, which was the last time we came out of a crisis.

Warren Buffett made headlines today for a major investment in Japan. Seasonal investors may want to follow him, as September has seen an average gain of 1.16% over the past decade. More importantly, the four month period until December is the strongest time of the year for the Nikkie 225.

The S&P 500 is moderately positive for September, averaging 0.86% gain over the past decade. I took a look to see how it went during the election years and there is no strong trend:

  • 2016 -0.12%
  • 2012 + 2.4%
  • 2008 -9.1%
  • 2004 + 0.9%
  • 2000 -5.3%
  • 1996 + 5.4%
  • 1992 + 0.9%

Note, however, that October was negative for equities during the 2008, 2012 and 2016 elections and strongly positive for the US dollar.

As far as FX is concerned, I have a hard time finding anything noticeable. There is a slight upswing in the dollar in the short term, but over the past 30 years it has been one of the weakest years for the dollar.

Oil is strong in the long run, but the effects of hurricanes are diminishing and September is increasingly negative. For cypto, September is the worst month for bitcoin and has declined in September for three consecutive years (including 2017, which was the boom).

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