The weakest month of the year for the FTSE 100 is September. From 1 September – 30 September, over the last 25 years the pattern shows a significant negative annualized return of -19.8%. Despite the negative trend, there is still a 48% win rate, indicating nearly half of the September months recorded gains. However, losses tend to outweigh gains both in frequency and magnitude. The pattern has had 13 losing trades and 12 winning trades over the examined period, showing a relatively balanced frequency. However, the losses have been more substantial with a -4.94% average loss compared to the +1.87% average gain.
Furthermore, the volatility during this period is notable, with a 21.15% reading, indicating high fluctuations in returns.
One interesting aspect of the FTSE 100 index originally started at a base level of 1,000 points on January 3, 1984. Since then, the index has grown significantly and is now a key measure of the health of the UK economy and major companies. So, with Bank of England’s Bailey speech released on Friday last week analysts sense that the BoE is still not opening up a path for rapid rate cuts, despite Bailey’s confidence that inflation risks are receding. Bailey repeated his concerns about intrinsic inflation in the economy and that the costs of tighter policy may be less than what they were in the past. Will this take from Bailey help the FTSE fall in line with it’s seasonal pattern?
Looking at the FTSE technically we can see a strong ‘potential’ trend line (marked on the chart below) from May 2024’s and August 2024’s high. This makes the 8,400 level a key area for a potential reversal should we start to see seasonal weakness around the start of September.
Sign up here for thousands of more seasonal insights just waiting to be revealed!
Trade risks
Seasonal patterns do not always repeat themselves each year and despite its UK focus, the FTSE 100 is highly globalized, with many of its companies deriving substantial revenue from international markets.
Remember, don’t just trade it Seasonax It!
