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BofAML Repeats Art Cashin's Concerns Of A September Seasonal Slump

Tyler Durden's picture




 

Having cautioned investors this morning of the historical tendency for market reversals on September 22nd after hitting all-time highs, UBS' Art Cashin's warning has been echoed by BofAML's Macneil Curry who notes risk assets are set to correct as negative seasonals dominate the S&P500 this week. This is bullish for Treasuries, Curry adds.

 

As BofAML notes,

The evidence is weighing against risk assets for the week ahead.

 

Specifically, the week after September Triple Witching (which occurred Friday and is the term used to describe the quarterly expiry of US equity index futures, options on equity index futures and equity options) is consistently one of the poorest of the year for the S&P500.

In the 32 years since the creation of equity index futures, the S&P500 has fallen 69% of the time.

 

More recently, it has fallen in 10 of the past 12 years. Now, with the S&P500 at risk of completing a bearish reversal formation in daily candlesticks, the evidence is increasing.

In such an environment, Treasuries should rally.

And here is the even more ominous warning from UBS' Art Cashin that markets tend to crash on September 22 after all-time highs...  based on a 2009 note from Barrons' Randall Forsyth (who cites work by Paul Macrae Montgomery)...

Montgomery recalls living through the October "massacres" of 1978 and 1979, the crash of 1987, the mini-crash of 1989, the 1997 Asian collapse and the Long-Term Capital Markets plunges, which started to cascade downward in late September. And while gold bullion topped in January 1980, gold stocks made their highs on Sept. 22 of that year, he adds. That date also saw the peak in many oil stocks.

 

Looking back farther, on Sept. 22, 1929, the Dow Jones Utility Index became the final major average to make its high before the Great Crash. And in 1873, a panic forced the New York Stock Exchange to shut down, Montgomery further details.

 

And who can forget 2008, when markets went into free fall in the days following the collapse of Lehman Brothers? What's remembered less well now is the market chaos in the subsequent days after the House of Representatives initially rejected legislation that created the Trouble Asset Relief Program

 

Currencies have seen historic changes around this date as well, he adds. The British pound was taken off the gold standard and was devalued a huge 28% on September 21, 1931. Exactly 54 years later, the Group of Five produced the Plaza Accord, which brought a sharp decline in the dollar and expansion of global liquidity. Black Wednesday, when Britain was forced to withdraw from the European Exchange Rate Mechanism, came a few days early on Sept. 16, 1992.

 

I also recollect that Treasury note and bond yields made their historic highs in late September, 1981, with shorter maturities hitting 17% and long bonds reaching 15%. That marked the end of a 35-year bear bond market from the end of World War II.

 

"If that's not enough, several of the astrological types claim their charts show [this] week is fertile ground for surprises – geo-political and otherwise."

Cashin ends - "Crazy?  Maybe, but forewarned is forearmed."

 

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Mon, 09/22/2014 - 13:32 | 5243688 NEOSERF
NEOSERF's picture

We seem to be back in the 2PM ramp pattern...goes down a hundred by 2 and by 3 it regains all losses...Fed injections or the BOJ buying stocks?

Mon, 09/22/2014 - 13:43 | 5243736 Caveman93
Caveman93's picture

69 Dude...69.

Mon, 09/22/2014 - 13:47 | 5243753 Ewtman
Ewtman's picture

Rare opportunity to test drive EWI services...

 

http://www.globaldeflationnews.com/never-before-offer-from-elliott-wave-...

 

Mon, 09/22/2014 - 13:51 | 5243779 NDXTrader
NDXTrader's picture

Oh boy. A Trader's Almanac post. All of these cycles are meaningless because they occurred before every central bank in the world started pumping massive amounts of fiat into the system and actively pushing equity indices up. Please give us more info on the waxing and waning of the moon. Janet Yellen's intake of Mueslix is probably more relevant

Mon, 09/22/2014 - 14:34 | 5243954 Nobody For President
Nobody For President's picture

So you are saying This Time is Different? Cycles are meaningless?

Good luck with that.

Mon, 09/22/2014 - 20:07 | 5245226 stocktivity
stocktivity's picture

no...he's saying It's all Bullshit!!!!

Mon, 09/22/2014 - 14:10 | 5243861 Augustus
Augustus's picture

She should have asked him to Take the Pledge to only use solar powered airplanes to fly to his vacation destinations.

 

RFK, Jr. would be an inconsequential croaking frog if his grandfather had not bought West Virginia and Chicago for his son.

Interesting to hear him propose local democracy having control while he proposes forcing everyone to have a 40 mpg car that can only be powered by electricity.

Mon, 09/22/2014 - 14:52 | 5244026 sosoome
sosoome's picture

And just how do you propose generating all the electricity to power those millions of mandated electric cars, Robert?

Sheesh. If I were that reporter I would have told him to keep his self righteous finger out of my face.

Mon, 09/22/2014 - 13:56 | 5243800 Maplehood
Mon, 09/22/2014 - 14:02 | 5243825 Bendromeda Strain
Bendromeda Strain's picture

He's early... 2015.75

"No crash for you - come back, one year!"

Mon, 09/22/2014 - 14:12 | 5243872 IronShield
IronShield's picture

Isn't Art kinda like Faber, but without the LBFM?

Mon, 09/22/2014 - 14:40 | 5243985 frankinpetca
frankinpetca's picture

OK experience and history doesn't affect people's actions, only the Fed. Who will send you a life preserver when the avalanche opps, I mean flood comes. Avalanches have no recovery thing. Even if it doesn't happen on the specified day, anyone reading it will file it away and be ready for that possibility, and that is the seed of a big big event waiting to happen, for some crazy event that doesn't seem to relate, but is waiting in our memory cache to spur the Sell activity. This isn't the Big One they are talking about, but the warning tremor that often happens before the Big One. Too much credit always has to reset!

Mon, 09/22/2014 - 16:15 | 5244378 brown_hornet
brown_hornet's picture

Autumnal equinox... bitchez

Mon, 09/22/2014 - 18:49 | 5244974 flow5
flow5's picture

Roc's in money flows determine the seasonal's.

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