Historically September is marked as the weakest month of the year. Every year as August comes to an end traders look to September with caution and prepare for the worst. This year was no different. Countless number of analysts came out and cautioned about the history of September and gave every possible reason why this September could follow in history's footsteps. But, as the month comes to a close today the markets tell a completely different story.
September 2017 will go down as a positive month, and the least volatile month of the year so far. The complete opposite of expectations. Optimism over healthcare, tax reform and economic growth continuing sent the markets to new all time highs. As analysts try and figure out why the markets continue to push higher with absolutely no sign of fear anywhere, long term investors are cheering with no concern as to why.
Volatility is at historic lows, and September saw that metric push to even further lows. Every metric that is used to measure volatility (fear) is at the lowest points in history. North Korea tensions, ANY Washington news that would normally spook markets, even if only for a short time, just have absolutely no impact. This has led to another study that shows even less concern.
The average daily range, which is usually tracked by the short term traders, averaged only 0.5% for the month of September. So is this a reason to be concerned going forward, or anticipate more optimism? Well, here comes a another historical fact from Wall Street. October has historically been the most volatile month of the year. This one month see's more 1% moves in the S&P 500 than any other month. This does not mean prices historically head lower though. For the year the markets have not pulled back more than 3%, period.
There is no doubt that there is a great tug of war between the bulls and bears right now. The problem is that the bears are losing the battle when everything should be going in their favor. For now it's hard to be a bear, but October could be their month. Time will tell and we'll tell you as we see it. Happy October!