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The S&P 500 and the late summer lull

Jay Kaeppel
2026-07-15
Based solely on seasonality, there is the potential for significant weakness in the stock market between now and early to mid-October. That said, seasonality is best used as an "alert as to what may be" rather than as an "immediate call to action." Nevertheless, right now is the time to plan regarding whether or not to "play some defense" to hedge against such an event.

Key points:

  • Looking ahead, one piece of potential good news is that October 1st starts one of the most favorable periods for stocks within the four-year election cycle
  • The bad news is that a) the Summer Rally period ended at the close on  July 14th (the S&P 500 gained 2.5% during the 12-day Summer Rally period), and b) August and September have a greater historical tendency to show weakness than all other months
  • No one should act solely based on an unfavorable seasonal tendency; That said, now is an excellent time for investors and traders to consider what action - if any - they would want to take if the market starts to sell off in the months directly ahead

Late July to mid-October can be challenging for stocks

One problem with looking at seasonal trends at all is that there is a mistaken tendency to believe (or to "want to believe") that a given market or security is likely to move in a certain direction based solely on the calendar. It's important to note that seasonality isn't a roadmap. It is merely a measure of movements in the past.

So, just because a given market or security is nearing or entering a supposedly favorable or unfavorable seasonal period does not automatically mean that a trader should expect to make a trade. Ho

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