Let's Hope Seasonal Tendencies Hold
by Charles B. Carlson, CFA
Dow Theory Forecasts

September was certainly a month to forget. The Dow Industrials tumbled 12% during the month, making this past September the worst since the September of 1937.

September is traditionally the worst month of the year, which means the market's seasonality held true for the month.

Let's hope that seasonality continues. Why? Because the last three months of the year are traditionally strong ones for the market.

Indeed, the Dow Jones Industrial Average has shown a positive return in the fourth quarter in 58 of the previous 82 years, according to The Wall Street Journal. In other words, in nearly three out of every four years, the Dow produces positive results in the last quarter of the year.

Of course, this fourth quarter will face many challenges, not the least of which is a potential war with Iraq and continued weakness in corporate profits.

Still, this market is due for some good news, and it wouldn't take much in the way of positive news to generate a bump higher over the next few months.

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