The stock market drops 70% of the time in the session as it enters the dead zone

Banks and stocks

The S&P 500 traded lower 70 percent of the time during the las two weeks of the month September, although the market entered the dead zone, The index was trading with an increase of 1.4 percent this month and is currently in its record high.

There are reasons why September could still live up to its devastating reputation in the stock market.

The first reason is that the Federal Reserve will more likely start the process of unwinding its $4.5 trillion balance sheet after a two-day meeting that was held this week. The central bank acquired most of its massive portfolio during the financial crises.

This will be the first time that the central bank would attempt to unwind in this intensity because in the past, smaller-balance sheet reductions have triggered recessions.

Chief analyst at Lindsey group, Peter Boockvar, stated in a note the “This tightening cycle is about to ramp up with liquidity being drawn each and every month and by another higher increment after 3-month intervals until at some point $50 billion per month of liquidity will suddenly disappear,”

Another reason September could pose threats for investors is the tensions between the U.S. and North Korea.

Just last week, North Korea launched another missile that flew over Japan before landing into its waters. The launch happened after the U.N. Security Council imposed a ban on North Korea’s textile exports and capped its crude oil imports.


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