4 reasons why the ASX 200 will struggle in September

[bigdog]

4 reasons why the ASX 200 will struggle in September​

By Kerry Sun
Wed 03 Sep 25, 2:42pm (AEST)

4 reasons why the ASX 200 will struggle in September

ASX 200 September outlook: 75% likelihood of a pullback after a 14.4% rally, but strong earnings and neutral positioning suggest shallow pullback.

www.marketindex.com.au

Key Points​

• September historically delivers the worst ASX performance with average -0.11% returns and only 52.5% success rate, with weakness intensifying over recent years to -2.2% average over the past five years.
• Bell Potter's Richard Coppleson sees a 75% probability of a 5% market correction within two months, as it's been over three months since the last meaningful >3% pullback despite typical 1.5-2 month frequency.
• ASX 300 Industrials posted the highest earnings beat rate in over two years at +11 percentage points, with conservative FY26 guidance potentially setting the stage for earnings upgrades when combined with expected RBA rate cuts.

The S&P/ASX 200 is consolidating after an impressive five-month rally from April to August, gaining 14.4% and breaking through the psychologically important 9,000 level for the first time in history.

The market's 1.3% decline in early September comes as little surprise given this strong performance and September's historical reputation as the weakest month for equity markets.

September is the worst month for the ASX​

My colleague Carl Capolingua's two-part analysis highlights the depth of September's seasonal challenges. The key numbers include:

• Uniquely weak performance: September is the only month with a negative average return (-0.11%) over the past 40 years.
• Disaster prone: Several major downturns have historically begun in September, including the lead-up to the 1987 crash and the 2009 GFC plunge.
• Poor reliability: The market rises just 52.5% of the time in September, the lowest success rate of any month.
• Early October recovery: October typically delivers modest gains (+0.07% average) as markets rebound from September weakness.

The volatility extends beyond September itself. Weekly patterns show heightened turbulence from week 36 onwards, with the September-November period containing the year's worst individual trading weeks for the All Ordinaries.

What makes September particularly concerning is that its weakness has actually deepened in recent years:

• 40-years: slightly negative (-0.11%), gain reliability 52.5%
• 20-years: -0.33%, gain reliability 55%
• 10-years: -1.2%, gain reliability <50%
• 5-years: -2.2%, gain reliability 20% (4/5 years down)

This deteriorating trend suggests the "September Swoon" isn't just a historical occurrence, it's becoming more pronounced. The data also reveals that traditional seasonal weak spots are shifting, with investors increasingly front-running these patterns and compressing their timing.

We're overdue for a selloff​

Bell Copper's Richard Coppleson argues the market is statistically overdue for a correction. His analysis shows declines of 3% or more typically occur every 1.5-2 months, yet it's been over three months since the last meaningful pullback.

His early August research report noted how markets are "now stretched and we have just entered the danger months of August and more-so September."

"So to me, the odds of a selloff are now at 75% of a selloff of around -5% in the next 2 months."

However, Coppleson expects any decline to be short-lived. Historical patterns show these corrections get "bought aggressively," particularly with several supportive factors now in play:

• Expected Fed rate cuts providing monetary tailwinds
• Strong seasonal performance typically seen from October through year-end
• Institutional pressure driving a rapid bounce

This creates what Coppleson calls a "Fear of Underperforming Benchmark" (FOUB) cycle among fund managers. Those who miss buying opportunities during corrections risk falling behind their benchmarks, creating intense pressure to re-enter the market quickly and driving the characteristic V-shaped recovery pattern.

The bottom line: while a ~5% correction may be likely, it could also present a compelling buying opportunity for those positioned to act.

It's the same over on Wall Street​

The seasonal weakness isn't confined to Australia. September has been the S&P 500's worst-performing month since 1928, with an average decline of -1.17%. The pattern becomes even more pronounced in the month's second half, where Goldman Sachs data shows the worst two-week stretch of the entire year, averaging -1.38%.

S&P 500 seasonality (Source: SentimenTrader)​

The VIX historically rises during September, creating a perfect storm scenario. With systematic strategies already positioned fully long, markets remain particularly vulnerable to volatility shocks that could trigger widespread de-risking.

Government bonds also show negative seasonality. Over the past decade, global bonds with maturities over 10 years have posted a median September loss of around 2%, making it their weakest month of the year.

A wall of worries​

Seasonality aside, the market's got a wall of worries to climb, including:

Longer-dated bond yields are ticking higher on fiscal pressures and political instability.This is particularly the case in the UK, where 30-year yields have risen to 5.7%

UK 30-year bond yield (Source: TradingView)​

Concerns about Fed independence are gaining traction. Some strategists warn that both equity and bond valuations fail to reflect the risks to Fed autonomy, particularly given the current political climate.

Tariff uncertainty resurfaced after a US Court of Appeals upheld the ruling that Trump’s IEEPA tariffs are illegal, but kept them in place pending an appeal to the Supreme Court. This legal limbo creates ongoing pricing difficulties for businesses and adds another layer of policy uncertainty.

Has the market overhyped rate cuts? S&P Chief Business Economist Chris Williamson recently flagged rising US selling prices in August, warning that "the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory." This suggests markets may have gotten ahead of themselves on dovish Fed expectations.

The combined valuations of the US market have hit all-time highs, according to Bloomberg. This includes metrics like price-to-earnings, price-to-book, price-to-sales, EV/EBITDA, market cap to GDP and more. This surpasses the peak of the 2000 Dot-Com bubble and the high seen in 1929, before the Great Depression.

Not all is lost​

While near-term weakness appears likely, several factors suggest any pullback could be relatively shallow and well-supported.

Major investment banks note that positioning and sentiment remain notably neutral rather than euphoric, suggesting some degree of contrarian support.

• Deutsche Bank reports mega-cap growth and tech positioning at just 42%, well below historical extremes that typically precede major corrections
• Goldman Sachs observes that institutional investors already de-risked during August, effectively front-running the negative seasonality and reducing pressure for additional near-term selling
• Sentiment indicators remain cautious, with the AAII bull-bear spread staying negative for four consecutive weeks, creating potential for contrarian buying support

The recent ASX reporting season delivered surprisingly robust results despite broader macroeconomic headwinds. Macquarie analysts highlighted that ASX 300 Industrials posted an +11 percentage point net beat rate (33% beat vs 22% missed), the highest beat rate in over two years.

The strength was broad-based across sectors:

• Growth stocks (e.g. Zip, Life360, Seek) exceeded expectations. Macquarie noted over half (52%) beat consensus, while only 20% missed on margins.
• Domestic cyclicals (Aussie Broadband, Monadelphous, Australian Clinical Labs etc.) posted the second highest EPS surprise, driven by better-than-expected margins.
• Retail (e.g. Harvey Norman, Nick Scali, Super Retail, The Lottery Corp) demonstrated resilient consumer spending, with margin expansion.
• Financials (e.g. Pinnacle, AMP, Hub24) delivered solid earnings growth. The Big Four Banks (ex-CBA) also highlighted better-than-expected Q3 trading updates.

Macquarie's analysis suggests the foundation is being laid for earnings growth: "If growth indicators keep improving, we should see earnings follow in FY26."

The analysts believe conservative guidance has set a low bar for the coming year, and when combined with expected RBA rate cuts and an improving domestic economy, this creates scope for meaningful earnings upgrades throughout FY26.

The bottom line​

The likelihood of a pullback and heightened volatility over the coming month remains high, with plenty of negative catalysts to worry about. However, underlying corporate fundamentals remain sound and rate cuts are a matter of when, not if. Amid this weakness, let's see where the dust settles.

 

[Dona Ferentes]

@bigdog .. some is doubled paste ... edit??

 

[divs4ever]

4 reasons why the ASX 200 will struggle in September​

By Kerry Sun
Wed 03 Sep 25, 2:42pm (AEST)

4 reasons why the ASX 200 will struggle in September

ASX 200 September outlook: 75% likelihood of a pullback after a 14.4% rally, but strong earnings and neutral positioning suggest shallow pullback.

www.marketindex.com.au

Key Points​

• September historically delivers the worst ASX performance with average -0.11% returns and only 52.5% success rate, with weakness intensifying over recent years to -2.2% average over the past five years.
• Bell Potter's Richard Coppleson sees a 75% probability of a 5% market correction within two months, as it's been over three months since the last meaningful >3% pullback despite typical 1.5-2 month frequency.
• ASX 300 Industrials posted the highest earnings beat rate in over two years at +11 percentage points, with conservative FY26 guidance potentially setting the stage for earnings upgrades when combined with expected RBA rate cuts.

The S&P/ASX 200 is consolidating after an impressive five-month rally from April to August, gaining 14.4% and breaking through the psychologically important 9,000 level for the first time in history.

The market's 1.3% decline in early September comes as little surprise given this strong performance and September's historical reputation as the weakest month for equity markets.

September is the worst month for the ASX​

My colleague Carl Capolingua's two-part analysis highlights the depth of September's seasonal challenges. The key numbers include:

• Uniquely weak performance: September is the only month with a negative average return (-0.11%) over the past 40 years.
• Disaster prone: Several major downturns have historically begun in September, including the lead-up to the 1987 crash and the 2009 GFC plunge.
• Poor reliability: The market rises just 52.5% of the time in September, the lowest success rate of any month.
• Early October recovery: October typically delivers modest gains (+0.07% average) as markets rebound from September weakness.

The volatility extends beyond September itself. Weekly patterns show heightened turbulence from week 36 onwards, with the September-November period containing the year's worst individual trading weeks for the All Ordinaries.

What makes September particularly concerning is that its weakness has actually deepened in recent years:

• 40-years: slightly negative (-0.11%), gain reliability 52.5%
• 20-years: -0.33%, gain reliability 55%
• 10-years: -1.2%, gain reliability <50%
• 5-years: -2.2%, gain reliability 20% (4/5 years down)

This deteriorating trend suggests the "September Swoon" isn't just a historical occurrence, it's becoming more pronounced. The data also reveals that traditional seasonal weak spots are shifting, with investors increasingly front-running these patterns and compressing their timing.

We're overdue for a selloff​

Bell Copper's Richard Coppleson argues the market is statistically overdue for a correction. His analysis shows declines of 3% or more typically occur every 1.5-2 months, yet it's been over three months since the last meaningful pullback.

His early August research report noted how markets are "now stretched and we have just entered the danger months of August and more-so September."

"So to me, the odds of a selloff are now at 75% of a selloff of around -5% in the next 2 months."

However, Coppleson expects any decline to be short-lived. Historical patterns show these corrections get "bought aggressively," particularly with several supportive factors now in play:

• Expected Fed rate cuts providing monetary tailwinds
• Strong seasonal performance typically seen from October through year-end
• Institutional pressure driving a rapid bounce

This creates what Coppleson calls a "Fear of Underperforming Benchmark" (FOUB) cycle among fund managers. Those who miss buying opportunities during corrections risk falling behind their benchmarks, creating intense pressure to re-enter the market quickly and driving the characteristic V-shaped recovery pattern.

The bottom line: while a ~5% correction may be likely, it could also present a compelling buying opportunity for those positioned to act.

It's the same over on Wall Street​

The seasonal weakness isn't confined to Australia. September has been the S&P 500's worst-performing month since 1928, with an average decline of -1.17%. The pattern becomes even more pronounced in the month's second half, where Goldman Sachs data shows the worst two-week stretch of the entire year, averaging -1.38%.

View attachment 207659

S&P 500 seasonality (Source: SentimenTrader)​

The VIX historically rises during September, creating a perfect storm scenario. With systematic strategies already positioned fully long, markets remain particularly vulnerable to volatility shocks that could trigger widespread de-risking.

Government bonds also show negative seasonality. Over the past decade, global bonds with maturities over 10 years have posted a median September loss of around 2%, making it their weakest month of the year.

A wall of worries​

Seasonality aside, the market's got a wall of worries to climb, including:

Longer-dated bond yields are ticking higher on fiscal pressures and political instability.This is particularly the case in the UK, where 30-year yields have risen to 5.7%

View attachment 207660

UK 30-year bond yield (Source: TradingView)​

Concerns about Fed independence are gaining traction. Some strategists warn that both equity and bond valuations fail to reflect the risks to Fed autonomy, particularly given the current political climate.

Tariff uncertainty resurfaced after a US Court of Appeals upheld the ruling that Trump’s IEEPA tariffs are illegal, but kept them in place pending an appeal to the Supreme Court. This legal limbo creates ongoing pricing difficulties for businesses and adds another layer of policy uncertainty.

Has the market overhyped rate cuts? S&P Chief Business Economist Chris Williamson recently flagged rising US selling prices in August, warning that "the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory." This suggests markets may have gotten ahead of themselves on dovish Fed expectations.

The combined valuations of the US market have hit all-time highs, according to Bloomberg. This includes metrics like price-to-earnings, price-to-book, price-to-sales, EV/EBITDA, market cap to GDP and more. This surpasses the peak of the 2000 Dot-Com bubble and the high seen in 1929, before the Great Depression.

Not all is lost​

While near-term weakness appears likely, several factors suggest any pullback could be relatively shallow and well-supported.

Major investment banks note that positioning and sentiment remain notably neutral rather than euphoric, suggesting some degree of contrarian support.

• Deutsche Bank reports mega-cap growth and tech positioning at just 42%, well below historical extremes that typically precede major corrections
• Goldman Sachs observes that institutional investors already de-risked during August, effectively front-running the negative seasonality and reducing pressure for additional near-term selling
• Sentiment indicators remain cautious, with the AAII bull-bear spread staying negative for four consecutive weeks, creating potential for contrarian buying support

The recent ASX reporting season delivered surprisingly robust results despite broader macroeconomic headwinds. Macquarie analysts highlighted that ASX 300 Industrials posted an +11 percentage point net beat rate (33% beat vs 22% missed), the highest beat rate in over two years.

The strength was broad-based across sectors:

• Growth stocks (e.g. Zip, Life360, Seek) exceeded expectations. Macquarie noted over half (52%) beat consensus, while only 20% missed on margins.
• Domestic cyclicals (Aussie Broadband, Monadelphous, Australian Clinical Labs etc.) posted the second highest EPS surprise, driven by better-than-expected margins.
• Retail (e.g. Harvey Norman, Nick Scali, Super Retail, The Lottery Corp) demonstrated resilient consumer spending, with margin expansion.
• Financials (e.g. Pinnacle, AMP, Hub24) delivered solid earnings growth. The Big Four Banks (ex-CBA) also highlighted better-than-expected Q3 trading updates.

Macquarie's analysis suggests the foundation is being laid for earnings growth: "If growth indicators keep improving, we should see earnings follow in FY26."

The analysts believe conservative guidance has set a low bar for the coming year, and when combined with expected RBA rate cuts and an improving domestic economy, this creates scope for meaningful earnings upgrades throughout FY26.

The bottom line​

The likelihood of a pullback and heightened volatility over the coming month remains high, with plenty of negative catalysts to worry about. However, underlying corporate fundamentals remain sound and rate cuts are a matter of when, not if. Amid this weakness, let's see where the dust settles.

now there are several companies going ex-div. but that is fairly normal ( for September ) as is the season S7P index re-balances what is unusual is the proposed tweak S&P plans on how the indexes are calculated , it will no longer be enough to have a large market cap.

another trend will be the reaction to smaller divs in some of the large cap. stocks

 

[bigdog]

@bigdog .. some is doubled paste ... edit??

I fixed the double postings thank you

 

[divs4ever]

4 reasons why the ASX 200 will struggle in September​

By Kerry Sun
Wed 03 Sep 25, 2:42pm (AEST)

4 reasons why the ASX 200 will struggle in September

ASX 200 September outlook: 75% likelihood of a pullback after a 14.4% rally, but strong earnings and neutral positioning suggest shallow pullback.

www.marketindex.com.au

Key Points​

• September historically delivers the worst ASX performance with average -0.11% returns and only 52.5% success rate, with weakness intensifying over recent years to -2.2% average over the past five years.
• Bell Potter's Richard Coppleson sees a 75% probability of a 5% market correction within two months, as it's been over three months since the last meaningful >3% pullback despite typical 1.5-2 month frequency.
• ASX 300 Industrials posted the highest earnings beat rate in over two years at +11 percentage points, with conservative FY26 guidance potentially setting the stage for earnings upgrades when combined with expected RBA rate cuts.

The S&P/ASX 200 is consolidating after an impressive five-month rally from April to August, gaining 14.4% and breaking through the psychologically important 9,000 level for the first time in history.

The market's 1.3% decline in early September comes as little surprise given this strong performance and September's historical reputation as the weakest month for equity markets.

September is the worst month for the ASX​

My colleague Carl Capolingua's two-part analysis highlights the depth of September's seasonal challenges. The key numbers include:

• Uniquely weak performance: September is the only month with a negative average return (-0.11%) over the past 40 years.
• Disaster prone: Several major downturns have historically begun in September, including the lead-up to the 1987 crash and the 2009 GFC plunge.
• Poor reliability: The market rises just 52.5% of the time in September, the lowest success rate of any month.
• Early October recovery: October typically delivers modest gains (+0.07% average) as markets rebound from September weakness.

The volatility extends beyond September itself. Weekly patterns show heightened turbulence from week 36 onwards, with the September-November period containing the year's worst individual trading weeks for the All Ordinaries.

What makes September particularly concerning is that its weakness has actually deepened in recent years:

• 40-years: slightly negative (-0.11%), gain reliability 52.5%
• 20-years: -0.33%, gain reliability 55%
• 10-years: -1.2%, gain reliability <50%
• 5-years: -2.2%, gain reliability 20% (4/5 years down)

This deteriorating trend suggests the "September Swoon" isn't just a historical occurrence, it's becoming more pronounced. The data also reveals that traditional seasonal weak spots are shifting, with investors increasingly front-running these patterns and compressing their timing.

We're overdue for a selloff​

Bell Copper's Richard Coppleson argues the market is statistically overdue for a correction. His analysis shows declines of 3% or more typically occur every 1.5-2 months, yet it's been over three months since the last meaningful pullback.

His early August research report noted how markets are "now stretched and we have just entered the danger months of August and more-so September."

"So to me, the odds of a selloff are now at 75% of a selloff of around -5% in the next 2 months."

However, Coppleson expects any decline to be short-lived. Historical patterns show these corrections get "bought aggressively," particularly with several supportive factors now in play:

• Expected Fed rate cuts providing monetary tailwinds
• Strong seasonal performance typically seen from October through year-end
• Institutional pressure driving a rapid bounce

This creates what Coppleson calls a "Fear of Underperforming Benchmark" (FOUB) cycle among fund managers. Those who miss buying opportunities during corrections risk falling behind their benchmarks, creating intense pressure to re-enter the market quickly and driving the characteristic V-shaped recovery pattern.

The bottom line: while a ~5% correction may be likely, it could also present a compelling buying opportunity for those positioned to act.

It's the same over on Wall Street​

The seasonal weakness isn't confined to Australia. September has been the S&P 500's worst-performing month since 1928, with an average decline of -1.17%. The pattern becomes even more pronounced in the month's second half, where Goldman Sachs data shows the worst two-week stretch of the entire year, averaging -1.38%.

View attachment 207659

S&P 500 seasonality (Source: SentimenTrader)​

The VIX historically rises during September, creating a perfect storm scenario. With systematic strategies already positioned fully long, markets remain particularly vulnerable to volatility shocks that could trigger widespread de-risking.

Government bonds also show negative seasonality. Over the past decade, global bonds with maturities over 10 years have posted a median September loss of around 2%, making it their weakest month of the year.

A wall of worries​

Seasonality aside, the market's got a wall of worries to climb, including:

Longer-dated bond yields are ticking higher on fiscal pressures and political instability.This is particularly the case in the UK, where 30-year yields have risen to 5.7%

View attachment 207660

UK 30-year bond yield (Source: TradingView)​

Concerns about Fed independence are gaining traction. Some strategists warn that both equity and bond valuations fail to reflect the risks to Fed autonomy, particularly given the current political climate.

Tariff uncertainty resurfaced after a US Court of Appeals upheld the ruling that Trump’s IEEPA tariffs are illegal, but kept them in place pending an appeal to the Supreme Court. This legal limbo creates ongoing pricing difficulties for businesses and adds another layer of policy uncertainty.

Has the market overhyped rate cuts? S&P Chief Business Economist Chris Williamson recently flagged rising US selling prices in August, warning that "the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory." This suggests markets may have gotten ahead of themselves on dovish Fed expectations.

The combined valuations of the US market have hit all-time highs, according to Bloomberg. This includes metrics like price-to-earnings, price-to-book, price-to-sales, EV/EBITDA, market cap to GDP and more. This surpasses the peak of the 2000 Dot-Com bubble and the high seen in 1929, before the Great Depression.

Not all is lost​

While near-term weakness appears likely, several factors suggest any pullback could be relatively shallow and well-supported.

Major investment banks note that positioning and sentiment remain notably neutral rather than euphoric, suggesting some degree of contrarian support.

• Deutsche Bank reports mega-cap growth and tech positioning at just 42%, well below historical extremes that typically precede major corrections
• Goldman Sachs observes that institutional investors already de-risked during August, effectively front-running the negative seasonality and reducing pressure for additional near-term selling
• Sentiment indicators remain cautious, with the AAII bull-bear spread staying negative for four consecutive weeks, creating potential for contrarian buying support

The recent ASX reporting season delivered surprisingly robust results despite broader macroeconomic headwinds. Macquarie analysts highlighted that ASX 300 Industrials posted an +11 percentage point net beat rate (33% beat vs 22% missed), the highest beat rate in over two years.

The strength was broad-based across sectors:

• Growth stocks (e.g. Zip, Life360, Seek) exceeded expectations. Macquarie noted over half (52%) beat consensus, while only 20% missed on margins.
• Domestic cyclicals (Aussie Broadband, Monadelphous, Australian Clinical Labs etc.) posted the second highest EPS surprise, driven by better-than-expected margins.
• Retail (e.g. Harvey Norman, Nick Scali, Super Retail, The Lottery Corp) demonstrated resilient consumer spending, with margin expansion.
• Financials (e.g. Pinnacle, AMP, Hub24) delivered solid earnings growth. The Big Four Banks (ex-CBA) also highlighted better-than-expected Q3 trading updates.

Macquarie's analysis suggests the foundation is being laid for earnings growth: "If growth indicators keep improving, we should see earnings follow in FY26."

The analysts believe conservative guidance has set a low bar for the coming year, and when combined with expected RBA rate cuts and an improving domestic economy, this creates scope for meaningful earnings upgrades throughout FY26.

The bottom line​

The likelihood of a pullback and heightened volatility over the coming month remains high, with plenty of negative catalysts to worry about. However, underlying corporate fundamentals remain sound and rate cuts are a matter of when, not if. Amid this weakness, let's see where the dust settles.

now there are several companies going ex-div. but that is fairly normal ( for September ) as is the season S&P index re-balances what is unusual is the proposed tweak S&P plans on how the indexes are calculated , it will no longer be enough to have a large market cap.

another trend will be the reaction to smaller divs in some of the large cap. stocks

hmmm

internet being a foul-up again

at least i finally got to do a minor edit

 

[peter2]

I've found that "V" reversals are the hardest to trade and am usually a little late into the rally. The observation that markets are showing more "V" shaped reversals after dips due to instos buying the dip aggressively to improve their yearly performance against their benchmarks is interesting and probably valid. If they're cautious and miss the start of the rally then they're going to be behind their benchmarks and be judged poorly.

 

[Garpal Gumnut]

4 reasons why the ASX 200 will struggle in September​

By Kerry Sun
Wed 03 Sep 25, 2:42pm (AEST)

4 reasons why the ASX 200 will struggle in September

ASX 200 September outlook: 75% likelihood of a pullback after a 14.4% rally, but strong earnings and neutral positioning suggest shallow pullback.

www.marketindex.com.au

Key Points​

• September historically delivers the worst ASX performance with average -0.11% returns and only 52.5% success rate, with weakness intensifying over recent years to -2.2% average over the past five years.
• Bell Potter's Richard Coppleson sees a 75% probability of a 5% market correction within two months, as it's been over three months since the last meaningful >3% pullback despite typical 1.5-2 month frequency.
• ASX 300 Industrials posted the highest earnings beat rate in over two years at +11 percentage points, with conservative FY26 guidance potentially setting the stage for earnings upgrades when combined with expected RBA rate cuts.

The S&P/ASX 200 is consolidating after an impressive five-month rally from April to August, gaining 14.4% and breaking through the psychologically important 9,000 level for the first time in history.

The market's 1.3% decline in early September comes as little surprise given this strong performance and September's historical reputation as the weakest month for equity markets.

September is the worst month for the ASX​

My colleague Carl Capolingua's two-part analysis highlights the depth of September's seasonal challenges. The key numbers include:

• Uniquely weak performance: September is the only month with a negative average return (-0.11%) over the past 40 years.
• Disaster prone: Several major downturns have historically begun in September, including the lead-up to the 1987 crash and the 2009 GFC plunge.
• Poor reliability: The market rises just 52.5% of the time in September, the lowest success rate of any month.
• Early October recovery: October typically delivers modest gains (+0.07% average) as markets rebound from September weakness.

The volatility extends beyond September itself. Weekly patterns show heightened turbulence from week 36 onwards, with the September-November period containing the year's worst individual trading weeks for the All Ordinaries.

What makes September particularly concerning is that its weakness has actually deepened in recent years:

• 40-years: slightly negative (-0.11%), gain reliability 52.5%
• 20-years: -0.33%, gain reliability 55%
• 10-years: -1.2%, gain reliability <50%
• 5-years: -2.2%, gain reliability 20% (4/5 years down)

This deteriorating trend suggests the "September Swoon" isn't just a historical occurrence, it's becoming more pronounced. The data also reveals that traditional seasonal weak spots are shifting, with investors increasingly front-running these patterns and compressing their timing.

We're overdue for a selloff​

Bell Copper's Richard Coppleson argues the market is statistically overdue for a correction. His analysis shows declines of 3% or more typically occur every 1.5-2 months, yet it's been over three months since the last meaningful pullback.

His early August research report noted how markets are "now stretched and we have just entered the danger months of August and more-so September."

"So to me, the odds of a selloff are now at 75% of a selloff of around -5% in the next 2 months."

However, Coppleson expects any decline to be short-lived. Historical patterns show these corrections get "bought aggressively," particularly with several supportive factors now in play:

• Expected Fed rate cuts providing monetary tailwinds
• Strong seasonal performance typically seen from October through year-end
• Institutional pressure driving a rapid bounce

This creates what Coppleson calls a "Fear of Underperforming Benchmark" (FOUB) cycle among fund managers. Those who miss buying opportunities during corrections risk falling behind their benchmarks, creating intense pressure to re-enter the market quickly and driving the characteristic V-shaped recovery pattern.

The bottom line: while a ~5% correction may be likely, it could also present a compelling buying opportunity for those positioned to act.

It's the same over on Wall Street​

The seasonal weakness isn't confined to Australia. September has been the S&P 500's worst-performing month since 1928, with an average decline of -1.17%. The pattern becomes even more pronounced in the month's second half, where Goldman Sachs data shows the worst two-week stretch of the entire year, averaging -1.38%.

View attachment 207659

S&P 500 seasonality (Source: SentimenTrader)​

The VIX historically rises during September, creating a perfect storm scenario. With systematic strategies already positioned fully long, markets remain particularly vulnerable to volatility shocks that could trigger widespread de-risking.

Government bonds also show negative seasonality. Over the past decade, global bonds with maturities over 10 years have posted a median September loss of around 2%, making it their weakest month of the year.

A wall of worries​

Seasonality aside, the market's got a wall of worries to climb, including:

Longer-dated bond yields are ticking higher on fiscal pressures and political instability.This is particularly the case in the UK, where 30-year yields have risen to 5.7%

View attachment 207660

UK 30-year bond yield (Source: TradingView)​

Concerns about Fed independence are gaining traction. Some strategists warn that both equity and bond valuations fail to reflect the risks to Fed autonomy, particularly given the current political climate.

Tariff uncertainty resurfaced after a US Court of Appeals upheld the ruling that Trump’s IEEPA tariffs are illegal, but kept them in place pending an appeal to the Supreme Court. This legal limbo creates ongoing pricing difficulties for businesses and adds another layer of policy uncertainty.

Has the market overhyped rate cuts? S&P Chief Business Economist Chris Williamson recently flagged rising US selling prices in August, warning that "the rise in prices signaled by the survey puts the PMI data more into rate hiking, rather than cutting, territory." This suggests markets may have gotten ahead of themselves on dovish Fed expectations.

The combined valuations of the US market have hit all-time highs, according to Bloomberg. This includes metrics like price-to-earnings, price-to-book, price-to-sales, EV/EBITDA, market cap to GDP and more. This surpasses the peak of the 2000 Dot-Com bubble and the high seen in 1929, before the Great Depression.

Not all is lost​

While near-term weakness appears likely, several factors suggest any pullback could be relatively shallow and well-supported.

Major investment banks note that positioning and sentiment remain notably neutral rather than euphoric, suggesting some degree of contrarian support.

• Deutsche Bank reports mega-cap growth and tech positioning at just 42%, well below historical extremes that typically precede major corrections
• Goldman Sachs observes that institutional investors already de-risked during August, effectively front-running the negative seasonality and reducing pressure for additional near-term selling
• Sentiment indicators remain cautious, with the AAII bull-bear spread staying negative for four consecutive weeks, creating potential for contrarian buying support

The recent ASX reporting season delivered surprisingly robust results despite broader macroeconomic headwinds. Macquarie analysts highlighted that ASX 300 Industrials posted an +11 percentage point net beat rate (33% beat vs 22% missed), the highest beat rate in over two years.

The strength was broad-based across sectors:

• Growth stocks (e.g. Zip, Life360, Seek) exceeded expectations. Macquarie noted over half (52%) beat consensus, while only 20% missed on margins.
• Domestic cyclicals (Aussie Broadband, Monadelphous, Australian Clinical Labs etc.) posted the second highest EPS surprise, driven by better-than-expected margins.
• Retail (e.g. Harvey Norman, Nick Scali, Super Retail, The Lottery Corp) demonstrated resilient consumer spending, with margin expansion.
• Financials (e.g. Pinnacle, AMP, Hub24) delivered solid earnings growth. The Big Four Banks (ex-CBA) also highlighted better-than-expected Q3 trading updates.

Macquarie's analysis suggests the foundation is being laid for earnings growth: "If growth indicators keep improving, we should see earnings follow in FY26."

The analysts believe conservative guidance has set a low bar for the coming year, and when combined with expected RBA rate cuts and an improving domestic economy, this creates scope for meaningful earnings upgrades throughout FY26.

The bottom line​

The likelihood of a pullback and heightened volatility over the coming month remains high, with plenty of negative catalysts to worry about. However, underlying corporate fundamentals remain sound and rate cuts are a matter of when, not if. Amid this weakness, let's see where the dust settles.

So what all these "experts" are saying is ...

There will be a sell off in September ...

Unless there isn't ...

Clear as mud. Great help. No worries. Now I can "formulate" a plan. Not plan, but formulate, unless I decide to plan a formulation.

gg

 

[Dona Ferentes]

So what all these "experts" are saying is ...

There will be a sell off in September ...

Unless there isn't ...

Clear as mud. Great help. No worries. Now I can "formulate" a plan. Not plan, but formulate, unless I decide to plan a formulation.

gg

Four days in and I predict the first 3 days of September will see a sell-off, a swoon, conniptions à la carte.

 

[DannyB0000]

Have some cash set up off the table, don’t buy over valued stocks like the big banks or Ai tech stocks. I’m still worried about euphoria and a black swan event.