ChainThink reports that, according to a report by Bank of America Securities technical analyst Paul Ciana, historical data shows that August through October is typically the weakest three-month rolling period for the S&P 500 index, suggesting that U.S. equities may enter a more challenging phase for the year.
The report states that since 1928, the S&P 500 has averaged a near-zero return of -0.02% from August to October, with positive returns occurring in 55% of those years;
This period also has the largest average drawdown among all three-month rolling periods, with an average drawdown of 7.35%.
Ciana noted that seasonal weakness does not imply a reversal of the long-term trend; historically, November through January has typically been a strong period for U.S. equities, with the S&P 500 averaging a 3.54% gain.
In terms of assets, Bank of America believes that defensive assets such as the U.S. dollar, U.S. Treasuries, and gold typically perform strongly between August and October; among these, gold has risen in 61% of the periods since 1992, with an average gain of 2.52%.
Bank of America also cautions investors to be mindful of seasonal volatility risks and to mitigate potential market pullbacks through defensive asset allocation.