September has been the weakest month of the year in the DJIA from 1885 as we can see in the histogram of monthly expected return below.
DJIA Monthly Histogram from 1885
The average month of September is graphed as a histogram below. Twenty of the days in the month have a negative expected return.
DJIA September Histogram from 1885
The weakest periods have been September 3 to 10, and September 19-26. The fifth has been the high for the month and also the average high in any year. The odds of lower prices are increased by the 1.88-year cycle which peaked on the 28th of August.
The election year and the decennial pattern can also affect the results. The decennial pattern was developed by Edgar Laurence Smith at Ameritrust Bank in the 1930s. He found that the last digit in a year had an effect on the stock market. Years ending in zero had the worst returns and years ending in five had the best, etc. Here are the numbers for both conditions applied to the DJIA.
The last row is the average month in both a pre-election year and in years ending in three. There have only been six. In four of the six cases, the DJIA rose. The two down years were very big losses that pull the expected return numbers down.
The low in this September move down is likely to fall on the 25th. Expanding the scope of the analysis into October, the overall low for the month and the year has been in the last week of the month. Downside targets on the DJIA are at 31,700 and 29,800.