Technical analysts are highlighting how — if history is any guide — the stock market will continue its recent slump for a few more weeks, but then it could shoot higher into the year’s end.
They are noting the S&P 500 on average has struggled in late September and early October, before rallying through the fourth quarter.
Seasonal factors become bullish in Q4, said Ari Wald, an Oppenheimer & Co. technical analyst, in a note dated Saturday.
The chart below comes from Wald’s note. “We recommend being around for this,” said Wald, as he pointed to the S&P’s SPX, +0.33% encouraging performance in Q4 over the past 30 years.
September’s fourth week has been one of the worst weeks of the year, but then “seasonality shifts firmly bullish as we enter early October,” said Jonathan Krinsky, chief market technician at MKM Partners, in a note dated Sunday.
The graphic below from Krinsky’s note illustrates how this week has been a down week in 22 of the past 26 years. His graphic also shows how the S&P SPY, +0.33% tends to bottom in early October.
U.S. stocks, however, have so far shaken off this week’s dire track record. The S&P finished essentially unchanged on Monday, and stock futures were edging up early Tuesday.