Labor Day Tell
By
Rennie on Wednesday, September 8th, 2010 at 9:58 pm
The session immediately following the Labor Day holiday can be a telling indicator of future market direction. Looking back over the last five decades, there have been a total of 23 years in which the S&P closed lower immediately following the holiday break. In general, this has had consistently negative implications for stocks over the remainder of the month. Each occurrence is noted in the table below, along with the S&P’s performance through the last trading day of September…
S&P500 Closes Lower Following the Labor Day Holiday
09/07/10 S&P closes down… S&P ??? end of September
09/02/08 S&P closes down… S&P -8.7% end of September
09/03/02 S&P closes down… S&P -7.2% end of September
09/04/01 S&P closes down… S&P -8.1% end of September
09/05/00 S&P closes down… S&P -4.7% end of September
09/07/99 S&P closes down… S&P -5.0% end of September
09/07/93 S&P closes down… S&P +0.1% end of September
09/08/92 S&P closes down… S&P +0.8% end of September
09/03/91 S&P closes down… S&P -1.1% end of September
09/05/89 S&P closes down… S&P -1.0% end of September
09/08/87 S&P closes down… S&P +2.6% end of September
09/02/86 S&P closes down… S&P -6.9% end of September
09/03/85 S&P closes down… S&P -3.1% end of September
09/04/84 S&P closes down… S&P +0.7% end of September
09/07/82 S&P closes down… S&P -0.8% end of September
09/08/81 S&P closes down… S&P -1.5% end of September
09/04/79 S&P closes down… S&P +1.8% end of September
09/02/75 S&P closes down… S&P -1.9% end of September
09/03/74 S&P closes down… S&P -9.9% end of September
09/05/72 S&P closes down… S&P -0.6% end of September
09/06/66 S&P closes down… S&P -0.5% end of September
09/04/62 S&P closes down… S&P -3.9% end of September
09/05/61 S&P closes down… S&P -1.8% end of September
09/06/60 S&P closes down… S&P -5.3% end of September
Note that in 18 out of 23 occurrences, or 78% of the time, the S&P proceeded to trade lower heading into the end of the month. In only two cases out of twenty-three did the S&P manage a gain of 1% or more, while it fell 1% or more fifteen times. The average gain was a modest 1.2%, while the average loss was over three times as large at 4.0%. This indicates upside potential is likely to be capped below the August highs for the next few weeks, and that there’s still potential for September’s month-to-date gain of 4.7% to be completely erased over the next few weeks.
Labor Day Tell
By Rennie on Wednesday, September 8th, 2010 at 9:58 pmThe session immediately following the Labor Day holiday can be a telling indicator of future market direction. Looking back over the last five decades, there have been a total of 23 years in which the S&P closed lower immediately following the holiday break. In general, this has had consistently negative implications for stocks over the remainder of the month. Each occurrence is noted in the table below, along with the S&P’s performance through the last trading day of September…
S&P500 Closes Lower Following the Labor Day Holiday
09/07/10 S&P closes down… S&P ??? end of September
09/02/08 S&P closes down… S&P -8.7% end of September
09/03/02 S&P closes down… S&P -7.2% end of September
09/04/01 S&P closes down… S&P -8.1% end of September
09/05/00 S&P closes down… S&P -4.7% end of September
09/07/99 S&P closes down… S&P -5.0% end of September
09/07/93 S&P closes down… S&P +0.1% end of September
09/08/92 S&P closes down… S&P +0.8% end of September
09/03/91 S&P closes down… S&P -1.1% end of September
09/05/89 S&P closes down… S&P -1.0% end of September
09/08/87 S&P closes down… S&P +2.6% end of September
09/02/86 S&P closes down… S&P -6.9% end of September
09/03/85 S&P closes down… S&P -3.1% end of September
09/04/84 S&P closes down… S&P +0.7% end of September
09/07/82 S&P closes down… S&P -0.8% end of September
09/08/81 S&P closes down… S&P -1.5% end of September
09/04/79 S&P closes down… S&P +1.8% end of September
09/02/75 S&P closes down… S&P -1.9% end of September
09/03/74 S&P closes down… S&P -9.9% end of September
09/05/72 S&P closes down… S&P -0.6% end of September
09/06/66 S&P closes down… S&P -0.5% end of September
09/04/62 S&P closes down… S&P -3.9% end of September
09/05/61 S&P closes down… S&P -1.8% end of September
09/06/60 S&P closes down… S&P -5.3% end of September
Note that in 18 out of 23 occurrences, or 78% of the time, the S&P proceeded to trade lower heading into the end of the month. In only two cases out of twenty-three did the S&P manage a gain of 1% or more, while it fell 1% or more fifteen times. The average gain was a modest 1.2%, while the average loss was over three times as large at 4.0%. This indicates upside potential is likely to be capped below the August highs for the next few weeks, and that there’s still potential for September’s month-to-date gain of 4.7% to be completely erased over the next few weeks.