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Stock Market Insight: Will September Steal Back the 255 Points?
Positive Seasonal Bias for Stocks Only Lasts So Long

By Bob Stokes
Thu, 02 Sep 2010 16:45:00 ET
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So what of the 255-point rally in the Dow Industrials on the first day of the historically worst month for stocks -- September?
 
In the September 1 Short Term Update, EWI's Chief Market Analyst Steve Hochberg offers this explanation:
 
"...a positive seasonal bias exists throughout this week...Seasonals are tendencies only, so while it may be helpful to use these biases as one of many indicators, one cannot fashion a forecast based solely on them."
 
In 2008, the market sported a similarly positive seasonal bias:
 
 
You can see what happened in 2008 after the positive seasonal tendency "wore off."
 
Of course, what happened then may not unfold in the same way in 2010. The point, however, is to remember that September can be sinister.
 
Plus, Steve explained that there is a very specific time when a market analyst may gain the "greatest analytical insights" about a big rally or big decline.
 
Read about it, plus see an amazing chart of a "market price pattern fractal" when you click here for the Short Term Update, as part of a subscription to the Financial Forecast Service.

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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.
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