By Ron William, CFTe, MSTA

Seasonality Headwinds Strike Again!

Hedgeye (three bears): Goldilocks sent us.

This time last year broad risk markets accelerated their corrective wave, notably S&P500, marked by a near -20% peak-to-trough drawdown (mid-August & late-October). Will seasonality headwinds strike again? The month of September is a negative outlier due to a range of factors, as published in previous FSC blogs. Bottom-line, it’s historically the worst performing, generating a lowest monthly return of -0.6% and lowest probability of a positive return of 46% - according to a back test of S&P500 during 1964-2022 (Figure 1).

September Outlier: Monthly Return Stats for the S&P500 1964 - 2022

While this annual timing pattern is one of the most reliable and worst performing, it’s not a certainty, more so, given the near 50% hit ratio. Additionally, as with all heuristic models, there are exceptions, with best/worst sample periods to the historical average of 9%, -12% and STD of 4.4%.  Also important, is to blend quantitative statistical analysis with qualitative charting methods, to offer valuable context. For example, the broader negative seasonality pattern is a three-stage process, aligned with our “Roadmap signature” of a “price fall, oversold rally, followed by the rest of the fall” (Figure 2).

Three-Stage Seasonality Pattern

In the latest market setup, S&P500 peaked into late-July, marked by a key-day reversal, followed by a sharp decline, predicted in earlier FSC blogs. Currently, the market breaking down. A sustained corrective wave unlocks further downside risk into 4220 and 4130. Expect the worst period of September’s seasonality pattern to trigger in the backend (Figure 3), with likely rollover into October, which traditionally marks a final capitulation ‘true low’- often associated with the market anniversary of a fall-crash signature.

Beware of Late September

Recall 1987 Black Monday, 9/11 and the failure of Lehman ahead of the 2008 GFC, all occurred in this period, each resulting in big selloffs. The so-called September effect could be particularly chilling this year due to a confluence of macro event risks. These include rising crude oil prices, inflation risks and China’s pressured economy.

Review our follow-up theme on a “Crude Oil reawakening…”, and interview, highlighting a recovery base pattern targeting $105 and consequential impact to inflation. The uncomfortable combination of rallying oil and US10YR at new cycle highs, is disrupting the goldilocks soft-landing scenario and triggering a rotation into the “persisting inflation & sticky rates” narrative, adding further pressure on equities and valuations.

Interestingly, my industry peers remain split. Sharing the bearish camp, veteran technical anlayst Milton Berg warns of a potential 50% crash as severe recession sets in. Real vision hosted an interview with us together, in late 2022, featuring big picture views still in play. Meanwhile, leading the bull-case, BofA strategist Stephen Suttmeier cited in a note “the best setup for both September and the rest of the year is when S&P500 rallies between 10-20% [in H1]” (Figure 4). However, be mindful the S&P500 remains historically fragile, both in terms asymmetric risk and ongoing narrow leadership (Figure 4).  Stay alert!

FAANG Concentration Risk

Thank you to all FSC members for all your kind feedback and insightful questions on our FSC blog series. I welcome more interaction on

Ron William, CFTe Bio

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Ron William, CFTe, is a market strategist and educator/mentor with more than 20 years of experience working for leading macro research and institutional firms, producing tactical research and trading strategies. He specializes in global, multi-asset, top-down framework, grounded in behavioural technical analysis, driven by cycles based on the "Roadmap" signature model of veteran market technician Robin Griffiths, published in his book Mapping the Markets.”

Ron also applies a "market & mind" approach at IntensiChi, using the latest techniques in behavioral-risk models and neuroscience sourced from expert groups. He further supplements with mentoring/coaching, trained by the International Coaching Federation (ICF), and teaches a regulatory approved masterclass in Applied Behavioral Science, with investment, private banks and CFA Societies.

Ron's primary work, as part of his current institutional market advisory firm (RWA), acquired global industry recognition as winner of “Best FX Research” in 2020. Financial media programs and industry publications regularly feature his market insights, including “Is the big cycle about to turn?”, predicting the 2020 crash and alerting the “Minsky paradigm” of 2020 H2-2022.

Driven by high-integrity education, Ron serves as part of the education committee of the International Federation of Technical Analysts (IFTA), Development Director at the Foundation of the Study of Cycles (FSC), Head of SAMT’s Geneva Chapter, and an honorary member of ESTA. He is also a visiting lecturer at universities, active guest speaker for the CFA, CAIA and CISI, and senior teacher at colleges offering an accredited diploma in trading and investing.