fall forecast

September Can Be the Cruelest Month for Stocks

Bargain hunters should wait: Stocks are expected to fall - and then fall again. Source: F1 Online

Bargain hunters need to be patient. Although the German stock index, or DAX, has fallen 1,000 points from its all-time high in June, experts say it’s too early to expect prices to bottom out. With prices expected to weaken even further in the coming weeks, investors would be well advised to use financial instruments like put options to make a trading profit.

“Based on long-term averages, September is the weakest month in markets,” said Markus Reinwand of Frankfurt-based bank Helaba. Since its launch in 1988, the DAX has lost an average of 2.8 percent in September, much more than in any other month. September 2002 was the DAX’s weakest month ever, with shares losing more than 25 percent of their value.

Technical analysts are particularly wary this year as the DAX index recently slid below the so-called 200-day line, the index’s rolling average over that period. According to experts at DZ Bank, the DAX could now drop from its current 12,000-point mark to around 10,800.

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