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The Shortsellers’ Favourite Month at Trader’s Narrative

The Shortsellers’ Favourite Month

Here is another look at the historic weakness in September:

september worst month chartoftheday

While the previous chart I shared with you showed the percentage of times that the index (Dow Jones Industrial) rose in September: “Why You Should Write Off September“; this chart shows the average performance in the various months.

Not surprisingly, the two charts are similar. The best returns are clumped towards the end of the year. I’d like to see a EMH die-hard try to explain the pattern away :)

Surprisingly, April is also a good month - the best month in fact.

So you can sidestep the whole month, or learn to love it and short, as Tim suggested. I don’t pretend to have a crystal ball which tells me the future but when you combine the headwinds of historical monthly performance with the technical picture and the current stock market sentiment, things don’t look too good for this month.

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