“In 1987 and 2000, the month of August presented a great chance to sell stocks”
Many investors know that some time periods of the year tend to be more bullish for stocks, like the holiday season. Other times tend to be more bearish, like September and October.
However, seasonal tendencies are just that and don’t mean the stock market will follow the expected script every year.
That said, an investor doesn’t want to dismiss seasonal tendencies, especially when technical factors, such as Elliott wave analysis, align with those tendencies.
Presently, we are entering a seasonally bearish time period, especially when you consider milestone years. Here’s a quote from our Aug. 14 U.S. Short Term Update:
In 1987 and 2000, the month of August presented a great chance to sell stocks. In 1929, the final high came just a few days into the next month, on September 3. At the 2007 stock market peak, several stock indexes topped a few weeks before August, in mid-July, such as the Dow Jones Composite, the Value Line Composite and the small-cap sector.
Looping back to the statement that one should combine one’s knowledge of seasonal tendencies with Elliott wave analysis, let’s pick out one of those milestone years — 2000 — and see what the Elliott wave pattern for the Dow Industrials looked like at the start of September in that year.
This chart and commentary are from the September 2000 issue of the Elliott Wave Financial Forecast:
Our confidence in the short-term picture is very high, which indicates a down September-October for the blue-chip averages.
The Dow rallied less than 1% into the middle of the next week, then plunged 15% into mid-October.]
Of course, not every milestone stock market year is an exact replica of the previous one.
But, as implied, it’s important to keep an eye on the stock market’s Elliott wave pattern in conjunction with any other indicator.
Learn what it shows right now by following the link below.
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EWI’s analysts set price targets for stocks, bonds, gold, silver, the U.S. dollar and more… in accord with the Elliott wave model.
Price targets are a far more effective strategy for investors and traders, versus making impulsive decisions “in the moment.”
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