The summer is almost over and September is just around the corner. But did you know it's not only a special month for students and teachers, but also for market analysts and traders?
The September Effect refers to historically weak stock market returns for the month of September. While many experts believe that such a calendar-based effect is merely a superstition, the fact - that it tends to affect investors' behavior - is worth noting.
For example, last year, even though the Federal Reserve was pumping trillions of dollars into the financial system and boosting asset prices, the S&P 500 declined by roughly -10% at the beginning of September and reached the previous level only in November.
If you take a look at the market data of the last 100 years, September has been the only month when the Dow Jones Industrial Average (DJIA) had negative returns. However, the effect is usually not overwhelming, so investors shouldn't expect that the market will crash every September.
In other words, some long term investors probably don't care about the “September Effect”, and some other traders might find it as an interesting opportunity to keep an eye on.
This year's potential catalysts
Even though the “September Effect” usually has no clear catalyst, having one or two candidates can increase the chances of it coming to fruition.
Currently, the Federal Reserve is starting to say comments that signal the end of tapering. So, the huge money inflow into the financial markets might be over, after more than a year since March 2020.
Another factor worth mentioning is that major market indices have doubled in price during the last year and a half, which might mark this as the fastest and highest bull run since World War 2. As a result, it may not be a surprise if big institutions took some profit at this point.
What instruments to watch out for?
Not sure if you want to trade it?
Market events can be exciting and scary at the same time, especially if you're just starting out.
This is where NAGA's community can help you – reach out to the community or post a question on the feed and get the conversations going. This is a great way to find someone who understands the events and whom you can potentially Autocopy.
Copyright © 2022 – All rights reserved.
NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.
The website is owned by The NAGA Group AG and operated by NAGA Global LLC which is incorporated under the laws of St. Vincent and the Grenadines as an Limited Liability Company (1189 LLC 2021) and is an operating subsidiary within The NAGA Group.
NAGA trademark is operated by NAGA Group subsidiaries, including:
Trade Responsibly: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing you money. Past performance of a NAGA community member is not a reliable indicator of his future performance. Content on NAGA's social trading platform is generated by the members of its community and does not contain advice or recommendations by or on behalf of NAGA.
Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the top-performing traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.
Restricted regions: NAGA Global Limited does not provide services for the residents of certain countries, such as the United States of America, Canada, the United Kingdom, Israel and the Islamic Republic of Iran.