August is historically one of the weaker points of the market. What do you need to know?
History never repeats, but it often does rhyme. This idea isn’t foreign to us chartists, but knowing where to draw the line between “repeating” & “rhyming” can be difficult for even the most advanced technical analysts. Outside of traditional support and resistance points, using historical average returns can provide some context as to how stocks/markets may perform. It goes without saying that this shouldn’t be the only thing we take into consideration when building out an investment thesis, but knowing how market participants have historically behaved during any one point in time can certainly be helpful, if not only just conversationally during client meetings.
August brings with it the dog days of summer. Last second summer trips before the kids head back to school, vicious heat and humidity, and unfortunately… relatively poor market conditions. August sees the S&P 500 SPX decline by just under 1% on average dating back to 1987, one of only four calendar months to do so. The month is the “worst” on average by various definitions of the word- seeing August post positive returns less than half of the time (the only month to do so.) In terms of “extreme” market environments, August isn’t extraordinary- with a maximum return of 8.76% and minimum return of -11%. The month comes just before a historically significant September, which brings in several historical downturns. The start of August in 2025 hasn’t been particularly kind to domestic equities, seeing Friday (8/1) slip on poor a poor jobs report.
As mentioned before, focusing solely on historical averages when building out an argument for broad investment isn’t a feasible path forward. Domestic equites remain quite strong from a long-term perspective, performing relatively better than other areas of the market as we move into August. As always, utilize the charts (and NDW’s alert functionality) to identify important support and resistance points for specific positions within your portfolio.
