Summary:
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Tomorrow marks the last trading day of the week/month/quarter
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This has historically been negative for US stocks
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S&P500 (US500) up just 33% of the time in the past 21 years
Tomorrow, Friday 28th September, marks not only the final trading day of the week but also the month and the third quarter. Markets can tend to be pushed in a certain direction at quarter end as managed money looks to mark up their positions and window dress them. Going back to 1997 there’s been quite an easy to spot trend for the S&P500 (US500 on xStation) on the final trading day of Q3 with some notable weakness evident.
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This table shows that US indices have struggled at the end of Q3 with all 4 markets posting negative median returns. Only the Russell 2000 has a positive mean return. Source: XTB Macrobond
Over the past 21 years the mean return on the S&P500 on the final day of Q3 has been -0.04% which in itself could be seen as pretty negative considering the market has been rallying for much of the period. However, the more telling stats are that the median return has been -0.3% and perhaps more important the market has only ended higher on 1 in 3 occasions.
US stocks have underperformed on the final trading day of Q3 with all 4 indices lower more often than they have gained. Source: XTB Macrobond
It’s a similar story for the DJIA (US30 on xStation) with this benchmark also ending in the red 33% of the time and even though the NASDAQ (US100 on xStation) and Russell 2000 (US2000 on xStation) have fared a little better they have still ended lower more often than they have gained. The Russell 2000 is the only one of the four indices with a mean gain (+0.08%) but its median performance is still lower (-0.04%). It is worth pointing out that in recent years this relationship hasn’t been quite so strong with the past 3 all seeing the markets post gains.
The 3 large cap markets are all enjoying a decent day of gains at the time of writing with the US100 the standout performer. The losses seen into last night’s close have been recaptured apart from for the US30 and even this is almost back to the level it fell from. The US2000 is struggling however with price still below the 1700 level and last night’s close marked a potentially significant break lower on the daily timeframe.
The US2000 fell to its lowest level in over a month yesterday and the market is in danger of turning lower. Ending the day below 1703 could be seen as pivotal and unless price can recapture this going forward then more downside could lie ahead. The 8 and 21 EMAs have printed a bearish cross which can be seen to suggest a downtrend, but it is worth pointing out that the past couple of occasions this signal has flashed it has proved false. Source: xStation
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