A Classic September

September has often been a cruel month for investors. Seasonality is not a given, but patterns have been noted. Many corrections have begun in the month and concluded in October. In some cases, like this year, the correction actually started much earlier. It just became obvious recently. Astute investors recognized that a correction was rolling through various sectors since the beginning of August. It is just that the biggest stocks held up the averages while many smaller companies traded down, well off their highs.

In fact, more stocks were trading below their 50-day moving averages than we have seen for quite some time. The Bull wrote in prior blogs that the stock market was vulnerable to increased volatility and a correction. The good news is that now that the mega-cap stocks holding up the averages have also come down, this process should be coming to an end. So, a sell-off underway in September, culminating in October with recovery going into the final quarter, all fits into a classic pattern. Stay steady my friends.

El Toro Solo