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Here comes a stock market 'washout': strategist

27% crash in the once red-hot stock of Tesla on fresh fears of overvaluation. In turn, those concerns have spilled over into selloffs for other 2020 runaway stocks such as Apple, Amazon, Netflix, Nikola and Advanced Micro Devices.

Then there are lawmakers totally flubbing the next fiscal response to the COVID-19 pandemic. Indeed that will bring risk to headline macroeconomic data later this month and into October. The market has to price that in. And last but not least — and no less important — is a November presidential election that may not be decided on Election Day.

Like we said, pick your poison.

Prudential Financial Chief markets strategist Quincy Krosby, the message from the latest bout of market weakness is clear. Brace yourself, a warranted plunge that shakes out the froth in stocks could be nearing before September ends.

told Yahoo Finance’s The First Trade.

“In terms of the calendar, this is a dicey period for the market,” says one strategist. REUTERS/Kai Pfaffenbach(GERMANY)

To Krosby’s point, stocks historically don’t perform well in September.

September has been the worst-performing month for markets, on average, since 1950, according to LPL Financial. The S&P 500 has dropped about 1% on average in the month of September since 1950, LPL Financial data shows. The only other month to notch a drop on average (and a minuscule one at that) going back to 1950 is August.

This month could be weaker than the averages because of the election. LPL Financial data reveals that the S&P 500 has shed 0.2% on average in an election year.

Investors seemed to have forgotten all of these nuances in their desire to ride the summer momentum in markets. They are likely to be reminded that stocks don’t always go up — and could fall sharply and quickly — very soon.

@BrianSozzi and on LinkedIn.” data-reactid=”41″>Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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