S&P 500 poised for gains in September despite seasonal pattern – Oppenheimer

[Bull market, Financial and business concept]
phive2015

The S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) is likely to see positive returns this September as it begins the month above its 200-day moving average. Historical data since 1950 showed that when the index starts September above this key technical level, it has averaged a 0.2% gain, and traded higher 49% of the time, compared to an average -3% loss when starting below the trend line, according to Oppenheimer analysts.

“Perhaps not a reason to be excessively bullish, at a minimum we don’t believe seasonal trends are a reason to be cautious in September,” Ari H. Wald, head of Technical Analysis at Oppenheimer, said.

Current market conditions appear favorable as the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) remains above its 200-day average, positioning it for potential gains rather than the typical September decline.

Wald pointed out that for any given month, the S&P has historically averaged a +0.7% return and traded higher 61% of the time, providing context for September’s typical performance. This positioning suggests investors may not need to exercise the usual caution associated with what has traditionally been considered a challenging month for equities, he said.

Previous concerns about market narrowness have significantly eased, according to the research, with internal breadth indicators showing improvement, subsequently moving “above the bull/bear demarcation line with 200-day participation reaching its highest count (64%) since December 2024,” Wald said. This represents a positive shift from earlier yellow flags that had been partially offset by bullish leadership patterns.

[S&P 500 Average Monthly Return (1950-2024)]
S&P 500 Average Monthly Return (1950-2024) (Oppenheimer & Co. and Bloomberg)

The election cycle is also expected to provide additional support for the market through year-end, Wald noted, highlighting that “post-election years with a second-term president are typically weakest during the months of February, March, June, and August, and become meaningfully stronger between September and December.” This cyclical pattern suggests the coming months could see stronger performance than earlier parts of the year.

Looking ahead, Wald expects the bull market to continue over the coming months with specific technical levels to watch: “For the S&P, we see 6,310 as the start of support (50-day average) and little identifiable resistance,” he said. The broader market health is further evidenced by the fact that most stocks have been in an uptrend since December 2024, with 60% of stocks in the Russell 3000 trading above their 200-day average, reinforcing the bullish outlook.

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