What may be in store for this September
Stock Trader's Almanac---Hirsch, Jeff---Vice President (slow)
>> stocks may have closed higher today but shares of its history working against them this month. in fact, 33 out of the last 52 years, september has been a down month for the dow industrial average. joining us to look at what may be in store for this september is jeff hersh, president of the hersh organization. and, of course, the stock traders almanac. welcome. good to see you again.
>> give aus sense here. up today. what’s that going to mean for the rest of the month. anything?
>> september has opened strong though it’s been a bad month and it’s after labor day. when you have the mpd after labor day it’s always been strong. this makes it eight of the last 10 so we are not surprised.
>> just getting back into it.
>> right. more volume today, it’s great. ends of the month is a little more precarious. it’s a point where people should watch out. i mean with the presidential election cycle and the coming off of the three years of the bear and all the good things happening, probably not going to have such bad september, i wouldn’t think. but there is definitely time for caution where you can get a nice drop there.
>> you mention today presidential election cycle. you have statistics related to all the other presidential years. what do they tell you?
>> the third year, the one we are in right now is the best, hasn’t been down since 39 when we were at the outset of world war ii. basically the year where the president primes the pump. we’ve had our tax cut. we’ve got the president working closely with the fed, not closely but definitely encouraging.
>> they are not fighting each other.
>> no, they are doing the right thing trying to make the people happy and make the economy do well. that’s what happens when the presidents try to get reelected. they want people’s wall let’s to be fat and people vote with their wall let’s.
>> does that statistic have more of a factor.
>> that’s noft powerful force on the market right now.
>> going back to the 1980’s, you mention that there is a particular set of years that gives you an indication of what we are looking at. now we have a chart we can bring up here concerning september. gentlemen, bring it up. the chart, there it is, dow industrial average, 1984. the month of september. what does this tell you about what we are looking at today?
>> what happened in 1984 was that there was a very strong august. also it happened in 82 as well. it was followed by a very weak september. august they were up 10, 11% each respective year at the beginning of a new bull market. we’ve had a pretty strong august not as strong as it was back then. what it’s telling me is that you have september seems to be a little weaker after a strong august. the stronger the august, the more likely there will be a substantial september.
>> again you are looking at a presidential situation that was very different from what we saw here in that year compared to this year. when you look at other presidents in the past and try to compare them to the presidents of today, what else do you see here that works against or with the trend?
>> well, i mean president bush is in a select group of presidents that were elected who lost the popular vote, and he’s also a president that’s involved in a post military action, so there are situations there that affect his reelection campaign.
>> you have john q. adams and rutherford b. hayes.
>> and harrison. they all lost the popular vote, got elected. hayes didn’t run and adams and harrison both lost. they didn’t get reelected. there is a nice obstacle there for mr. bush to get past.
>> how do you trade on something like that? you probably don’t.
>> you can. the whole thing is if you can know who is going to win the election you would be able to bet your stocks , put your bets on stocks well in advance. i mean if the president wins it’s strong for the market. if he loses it’s bad for the market. if an unpopular president is ousted, that’s great for the market after it happens, november, december. so if we can think that mr. bush is going to be reelected it would be very bullish for the market.
>> we have an additional thing in play in the month of september. two years after september 11. the anniversary is here. we saw a different action last year on the anniversary. do you expect to see any kind of change in the trader mentality, investor mentality.
>> i don’t think it will be as negative as it was the one year after. things are more on people’s minds. there wasn’t as much good news in the economy, good news in the market going on. traders are more keying in on that than terrorism.
>> what about those trying to get ahead of the october trend.
>> any weakness is a great time to get in right now. it’s definitely a buying period of time as opposed to a selling period of time. wait for people to sell, get in and get your positions.
>> you’ve been seeing that earlier and earlier.
>> it shifts.
>> the seasonal rallies many many expect, they’ve been moving up, as well as the seasonal selloffs, they move up as well. do you expect that with the october volitility we see.
>> i think there is an anticipation factor going on. if you look over time, october used to be the worst month. september has gotten progressly worse and october has seen a lot of turnarounds. you see people anticipating, people getting in ahead of time. it’s a faster paced world, technology.
>> if they spend too much time looking forward a month ahead they are not paying attention to what’s happening in the present month.
>> you have to not just look at seasonal things and listen to the tape yourself and act when the time is right.
>> there you have it. jeff hersh, thanks very much, the stock trader’s almanac. honda motors plant in the brazilian amazon will be getting upgrades in the coming months.
