Keystone's August Seasonality

Let's see what a typical August brings.  August is typically an up month, up about 1.3% on average, similar to the July expectation.  August is followed by September and October that are weak months. Biggest gains for any year are made between November and April so we remain in the lull summer period currently.

This month covers five weeks, 23 trading days, which is a lengthy month of trading. Labor Day is 9/5/11 which has served as an inflection point for markets the last few years. Tech is slow in the summer, the fourth quarter is always best for tech so a potential tech long list can be developed during August and September. Biotech is also strong in Q4 so the same idea applies.

August is in the heart of the June thru November hurricane season but all has been peaceful--so far. Oil, suppliers, home improvement and insurers all get a boost from the bad weather. Typically, oil likes to rally from August into October. Retail receives attention due to back-to-school sales. Some traders go long retail from Labor Day into mid October as a regular trade each year, so this would set up later in the month.

Gold typically bottoms in August.  August thru October is typically up for gold. September is Indian marriage season and India consumes about one-third of the world's gold supply.

Once the debt ceiling crisis settles, Congress should be on recess and out of session so that is typically bullish for stocks during August.