• Why Next Week Could See A Big Drop

    by  • September 20, 2013 10:31 am • Breaking News, Broad Market Analysis, Quick Hits • 4 Comments

    After one of the best starts in 40 years on the normally ‘scary’ month of September, I showed earlier this week why the rally could continue for the rest of the month.

    Well, maybe it isn’t quite that simple.  Turns out, next week is one of the most bearish weeks historically.  We looked at how September does the week after option expiration – so next week.  We’ve noticed over time, the SPX tends to sell-off some after option expiration, but September seems to really drop.

    Going back to 2000, the SPX is down -1.12% on average and up just 23% of the time.  Compare that with about flat and up 54% for the average week.  The median return is actually worse, down -1.63%.

    Here are the individual returns since 2000.  What really stands out is the past five years it is down four times and some of the drops are huge.

    What about the Monday after September expiration you ask?  Again, looks weak, as it is down -0.43% on average and up just 23% of the time.  This is much weaker than the average Monday.

    So there you go.  I’m still bullish longer-term, but after the run we’ve had, a little break could be warranted.  History suggests being very careful next week.

     

    About

    Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in 2003 and is a frequent speaker and writer on stock market and economic issues and is widely sought after by financial media for his expertise and commentary. Mr. Detrick is a common guest on CNBC, Fox Business, and Bloomberg Television and has been quoted in outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, the Associated Press, and others. With a decade of financial industry experience in the investment and financial services area, strengths include short-term trading with an eye toward timely technical- and sentiment-based trading opportunities, and advanced option trading strategies. Mr. Detrick received a BA in finance from Xavier University, an MBA in finance from Miami University, and has earned his Chartered Market Technician (CMT).

    http://schaefferstradingfloor.com/

    4 Responses to Why Next Week Could See A Big Drop

    1. bb06
      September 24, 2013 12:12 am at 12:12 am

      Obviously today was down but EOQ window dressing may be in effect. My thought process is if you are a hedge fund and down for the quarter one better make it up by the end of this week. Thanks for the open forum.

      • Ryan Detrick, CMT
        September 24, 2013 1:16 pm at 1:16 pm

        Tough to disagree with the logic. I’m more just going by history.

    2. bb06
      September 24, 2013 12:07 am at 12:07 am

      Ryan Septembers have been usually down but has been up big this month. Might that make a difference? Thanks

    3. Harold Hennies
      September 21, 2013 11:50 am at 11:50 am

      Hope “it’s different this time”!!

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