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Stock Rally At Crossroads With Bad Month Rising
If you ask JPMorgan's Mislav Matejka, equities are a risky proposition right now. And not just becau
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If September and October tend to be chancy months for stocks, why is it so?
I think it has something to do with full year consensus; a company can miss 1Q and 2Q while guiding to a 2H recovery, by the 3Q report it is too late to bet that 4Q will salvage the year, so if full year estimates are going to come down, that’s when it happens – either on pre-announcements in Sept or misses in Oct. That’s in “bad years”.
However, this year 1Q and 2Q reports were generally okay, 2023 estimates tended to hold or rise, and – subjective impression at best – management outlook and guides generally seem to be still-cautious (AI superstars aside).
If that’s true, and if economic winds don’t suddenly shift, then there should be few pre-announcements and more beat/raises than miss/lowers – which suggests a “good year”.
H’s chart shows “bad” and “good” Septembers. I wonder how often the market has had four consecutive “bad” Septembers – not often, I suspect.
Now, any seasonal pattern may be spurious, or due to systematic or derivatives or other factors way above my pay grade – the elephant I am vaguely groping, Mr Magoo-style, may be a bear after all.