As the unofficial end of Summer draws near, market activity is likely to pick up in the coming weeks as traders set themselves up for the end of the year. If history is any indication, the last four months should provide some improvement to this year's double-digit percentage losses. History shows, however, that September could present some rough sledding before any rally occurs.
In the chart below, we show the average historical trading pattern of the S&P 500 during the last four months of the year. The blue line shows the S&P 500's trading pattern from 1960 - 2007, while the red line shows the average of the last ten years. As shown, over both time frames, the S&P 500 typically declines during most of September before staging a year-end rally beginning in late September/early October.
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