The month of September normally gives equity investors a sinking feeling and for good reason: Historically, this has proven a bad month for the stock market.

As summer comes to a close, investors have already suffered a tough stretch. The S&P 500 declined 4.7% during August, and 5.7% year-to-date.

Factors contributing to this month's market activity, say market pros: the end of the second-quarter EPS euphoria; downward revisions to consensus earnings projections for real US GDP growth for the remainder of 2010 and 2011, exacerbated by worse-than-expected employment and housing data; and a slumping yield on the 10-year Treasury note fanning fears of a double-dip and deflation.

But if history is any guide, strategists emphasize, the S&P 500 has posted its worst monthly return in September whether you go back to 1990, 1970, 1945, or 1928.

Another reason to worry: mid-term elections could put additional pressure on the benchmark this month, Since 1930, the S&P 500 declined an average 1.7% in the September before the mid-term elections.

Of course there's no guarantee that what happened in the past will happen again, and through September 7^th, the S&P 500 is actually up by 4.0%. 

What does this tell us?  It tells us that the market can go either way or in fact both ways within a 30 day time period.  The markets seem stuck in a trading range of about 100 points from about 1,030 to 1,130. 

Contact Richard Taylor for additional information.