Navigate Through Potential Volatility With Seasonal Analysis

Incorporating seasonal analysis into your portfolio management process is one way to mitigate risk and navigate through unexpected spikes in volatility during September. This can allow you to identify sectors and industries that may outperform the broad market, particularly during historically turbulent times.

Our latest analysis identified three sectors that showed a seasonal tendency to outperform the S&P 500 Index during September over the last 20 years—a month when the index has on average been lower by 0.6%, generating positive returns only 50% of the time. As we review the data, note that nonseasonal factors still influence performance and should not be ignored.

The table below highlights sectors’ average over- and under-performance versus the S&P 500 during September since 1997, as well as the top-performing industry groups over the same time period:

Looking at the table above, the healthcare and telecommunication services sectors have on average tended to exhibit the highest relative strength versus the index in September over the past 20 years. But, if you are looking for a more targeted strategy, there are potential diamonds in the rough within a few of more seasonally weak sectors. Among those, the software & services industry group stands out given the broader information technology sector has posted the worst relative performance during September over the period; and since this group encompasses a larger market cap and overall weighting within the S&P 500, it tends to be more significant than the other two.

Although the index has tended to post negative returns in September, seasonal analysis can help you navigate through volatile times. And given September’s historical tendency to be one of the most volatile months of the year, it could be a good time to consider implementing seasonal analysis. Stay tuned to the LPL Research blog for continued analysis of S&P 500 seasonal patterns.


Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

The economic forecasts set forth in the presentation may not develop as predicted.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Stock investing involves risk including loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Because of their narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies.

This research material has been prepared by LPL Financial LLC.

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