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Can seasonal patterns beat the stock market dip? [Video]

Jerome Powell sent stocks sharply lower on Friday as he maintained a hawkish stance for the Fed in its fight against inflation.

Remember that high-interest rates make business conditions more challenging for companies as well as eating into consumers’ spare cash. So, that means investors should be very cautious about buying this dip as there could be another leg lower in stocks ahead.

However, US stocks do tend to have a strong seasonal period around the end of September. Therefore, if the Fed takes a dovish pivot around the end of September or October could help time some stock gains.

The S&P500 can be strong around the end of October through to year-end. Over the last decades, it showed an annualised return of 22.13%.

Trade risks: The main risk to this trade is if the Fed keeps aggressively hiking interest rates.


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Author

Giles Coghlan LLB, Lth, MA

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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