Traders Bet Rally Won’t Last

Historically, Septembers in the first year of a presidential administration have been tough for the stock market. For example, there was some unpleasantness in 1929, 1973 and 2001. Some traders are already bracing for trouble in September 2009:

Options traders are increasing bets that the steepest rally in the Standard & Poor’s 500 Index since the 1930s won’t survive September, historically the worst month for U.S. equities.
Traders are betting the VIX, a gauge of expected stock swings, will increase 13 percent in the next five weeks, according to futures prices compiled by Bloomberg. That’s the biggest spread since August 2008, right before the S&P 500 suffered the steepest two-month plunge in 21 years. The indexes have moved in the opposite direction 81 percent of the time over the past five years, Bloomberg data show.
(…)
History shows that U.S. investors lose the most in September. The benchmark index for American equities fell 1.3 percent on average since 1928 that month, data compiled by Bloomberg show.

(Via: Joe Weisenthal)

Posted by on August 10th, 2009 at 8:43 am


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