The S&P 500 is entering what SentimenTrader calls a weak seasonal window that runs from the 137th to the 197th trading day of the year — July 21 to Oct. 14 in 2026. The pattern shows up only about half the time, but when it does, the losses tend to outweigh the gains in the years it doesn’t.
The stretch of the calendar many traders dread for the S&P 500 is about to open. SentimenTrader Senior Research Analyst Jay Kaeppel pegs the soft patch to the period between the 137th and 197th trading day of the year, which in 2026 falls between July 21 and Oct. 14.
Historical math behind the window is stark. A dollar invested in the S&P 500 only across trading days 137 through 197 every year since 1985 would have shrunk to about 55 cents. Kaeppel writes that August and September are the only two calendar months that tend to decline on average. August alone has returned just 0.01% on average going back to 1950.
The weakness is far from a sure thing, though. The window has not delivered negative returns since 2023, when the index fell 4.6%, with the last two years finishing positive. Kaeppel frames it as roughly a coin toss. Yet when the pattern does hold and the index drops, the average and median losses of 7% and 5.2% tend to run bigger than the 5% and 4.1% gains seen in the positive years.
Because the odds sit near 50-50, Kaeppel argues for a middle path rather than a firm call. He suggests investors stay alert and set a plan now — raising some cash as a hedge if price falls a set amount, or for traders, weighing the short side through index futures, inverse exchange-traded funds, or options. His parting advice: don’t blindly sell in May and go away.
Source: Barron’s
Trading involves risk.
Risk Disclaimer
