Wall Street's Rally Faces Seasonal Challenges Ahead
The S&P 500 Equal-Weighted Index has outperformed the standard S&P 500 this year, indicating a broader market rally beyond just megacap stocks. However, historical data suggests that mid-August to early October in midterm election years tends to be volatile and often results in declines for major indices like the equal-weight S&P 500, Nasdaq Composite, and Russell 2000. BTIG technical strategist Jonathan Krinsky warns of a historically difficult period ahead. In midterm election years since 1990, these months have seen average losses across key market benchmarks. This year has been unusually calm with minimal broad selling pressure or volatility demand for protection, raising concerns about potential underestimation of risk. Krinsky advises investors to consider reducing exposure or hedging equity positions as the historically rough period approaches.
Tickers: $SPGI
Topics: calendar seasonality equal-weight index midterm election years S&P 500