September has been the weakest month of the year for the DJIA since 1885 as we can see in the histogram of monthly expected returns below.
DJIA Monthly Histogram Since 1885
The average month of September is shown in histogram form below. Twenty days of the month have a negative expected return.
DJIA September Histogram Since 1885
The weakest periods have been September 3 to 10 and September 19–26. The fifth is the highest for the month and the highest average for any year. The potential for lower prices is increased by the 1.88 year cycle that peaked on the 28thth of August.
Election years and decadal patterns can also affect the results. The decade pattern was developed by Edgar Lawrence Smith at Ameritrust Bank in the 1930s. They found that the last digit of a year has an effect on the stock market. The years ending at zero had the worst returns and the years ending at five had the best returns, etc. Here are the stats for both positions as applied to the DJIA.
The last row is the average month of both the pre-election year and the years ending in three. There have only been six. In four out of six cases, there was an increase in DJIA. The two years of the decline were those with huge losses, which fell short of the expected return numbers.
This September the lowest level is likely to fall on the 25thth, Extending the scope of the analysis to October, the overall bottom for the month and year has been in the last week of the month. Downside targets on the DJIA are 31,700 and 29,800.