Statistics never guarantee the future, but sometimes they help indicate when "it's best to stay calm."
Especially with the S&P 500, the U.S. stock index that has continuously reached new highs, prompting many without holdings to wonder, "Is it still time to enter or should I wait?"
Amid the market's intensity, both historical statistics and technical analyses from various firms point in the same direction:
"September tends to be the weakest month of the year for the S&P 500."
Could this be an opportunity for those who "missed the ride" to prepare cash to selectively buy strong fundamental stocks, rather than chasing prices at the peak...
The S&P 500 index is considered the benchmark for the U.S. stock market, comprising 500 large companies that represent about 80% of the market's total capitalization. It is widely used as a proxy reflecting the overall U.S. economy and stock market direction, as well as a reference index for many global funds.
Currently, the S&P 500 includes major tech giants such as Apple, Microsoft, Nvidia, Amazon, Meta, and Alphabet, making the index's movements heavily influenced by technology stocks.
Especially over the past 2-3 years, the AI trend, investments in technology infrastructure, and chip manufacturing have driven earnings and stock prices, enabling the S&P 500 to continuously reach new all-time highs.
However, although the long-term outlook for the U.S. stock market remains positive according to many analysts, warnings are emerging that after such strong gains, investors may need to prepare for volatility along the way.
For investors who missed the recent rally, waiting for market pullbacks and gradually accumulating strong fundamental stocks might be a more suitable strategy than chasing the index at high valuations.
The technical analysis team at Bank of America (BofA) sees the S&P 500 signaling a correction phase in Q3 after the market's recent strong rally.
They assess the pullback could take the form of a "Three-wave correction" or ABC correction wave per Elliott Wave theory, typically a retracement within a long-term uptrend rather than a sign of a Bear Market.
They also warn that if the index slightly surpasses a new high around 7,741 points, investors should not rush to buy, as this might be a Bull Trap— a false peak before the market reverses into a correction.
Nevertheless, the long-term outlook for U.S. stocks remains optimistic, with expectations that after the correction ends, the market may recover in Q4 and possibly experience a "Santa Rally" or year-end surge.
Asia Plus Securities research states that although the S&P 500 rose 14% in Q2, supported by corporate earnings especially from AI and semiconductor-related stocks,
investors should exercise caution late in Q3 because 10-year historical data shows September is the month with the lowest average returns, approximately -2%, indicating a chance of profit-taking or market consolidation during this period.
Besides seasonal factors, Asia Plus Securities notes that global investment trends are shifting from chasing AI stocks toward selecting lower-risk stocks like Value and Defensive sectors.
The Nasdaq index has declined while the Dow Jones made a new high, and semiconductor stocks fell over 11% in just two days amid concerns about intensifying competition in the AI chip industry.
Investors are advised to adopt a Selective Play strategy, focusing on individual stocks with growth potential.
In technology, Apple Inc. (AAPL) is highlighted as the standout among the 'Magnificent Seven,' with a positive outlook on John Ternus as CEO due to his product expertise, raising the likelihood of an iPhone Fold launch in September. Additionally, 10-year data shows AAPL stock performs best in Q3.
In healthcare, Hims & Hers Health Inc. (HIMS), a telehealth company, is favored, expected to benefit from demand for GLP-1 weight loss drugs following partnerships with Eli Lilly and Novo Nordisk, expanding its market share as the leading telehealth provider in the U.S.
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