September is the worst month...

Kate Gibson at Marketwatch quotes Art Hogan at Jeffries & Co. with five reasons to be cautious (link).

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1) September is historically the worst month...
2) The market has had a significant run up from its March 9 lows, up about 50%...
3) Insider selling...
4) Short interest is winding down...
5) The consumer in general...
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The more I read and hear about all the reasons for the stock market to go down, the lower the odds of a significant down turn. Let's take #1 on the list, September is the worst month. If every trader knows that and trades on it, most will jump the line and sell in August. Because of that, I see a quick and sharp sell off as a buying opportunity, SPY 95 would be a decent entry.

The reason seasonal indicators are not that reliable is because once they become widely known and proven by statistical backtesting, traders will jump the trade and mitigate the effect. If every trader and their brother is looking for a smash down in September, the event becomes less likely to happen, and mid to late August become more vulnerable.

The stock almanac gives these nuggets:
* average September is -0.7%
* worst September -11.9% in 1974
If we get an average September it would add up to be like the Friday we just had, Dow down about 70 points, SPY down 0.7, for the month. Even if we get another worst ever month, if we start here, SPY moves from 99 to 87, Dow 9300 down to 8200. Lower numbers than that would be a once in a lifetime kind of event. That doesn't mean it can't happen, but the odds are low, and readers know that I like to bet with the odds in my favor.