Gold and the September Stock Market Seasonality Syndrome

Many have been fixated with the concept of "September is the worst month for stocks" syndrome.

Again this is an understandable concern, especially coming off last year's meltdown which has been freshly ingrained in our memories.

In behavioral finance such phenomenon can be attributed to cognitive biases or heuristics known as the hindsight bias, anchoring and the focusing effect.

Nonetheless, so far the "seasonality impact" of the September syndrome has been initially validating the merits of the case with start of the month jitters. Although suggesting that this would be the dominant theme for the month would be too early or too premature to arrive at such conclusion.

We have made a contrarian case that instead of looking at the monthly seasonal effects on the stock market, we should instead focus on the US dollar's seasonal factors as discussed in The US Dollar Index’s Seasonality As Barometer For Stocks or gold (also discussed in Gold As Our Seasonal Barometer and Gold As Our Seasonal Barometer (For Stocks) II.

Yesterday, gold prices surged.

Yet we find another interesting commentary from Bespoke Invest, which almost parallels our view.

From Bespoke, ``With the correlation of gold and the S&P 500 at its most positive levels in over three years (chart below), will equities follow suit?"

My guess is that yes they will.