From seasonal weakness to seasonal strength

A good place to start deciphering the share markets at present is the seasonal pattern in shares. Typically the period from May that we have just come through is the weakest period of the year. The September quarter has lived up to its reputation as being poor for shares with both global and Australian share prices down around 8%, the worst since the September quarter 2011. Worries about China, the emerging world, commodity prices, Greece and the Fed have clearly played a big role. However, October is known as a “bear killer” month, as it often sees market declines bottom ahead of seasonal strength into year-end and the new-year (see chart below). A further leg down in shares remains a risk in the weeks ahead. However, along with the more positive seasonal pattern in the months ahead there are fundamental reasons to see a resumption of the cyclical bull market. Click the (VIEW LINK) to read more on these fundamental reasons.