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Springing to market opportunity

OVER the past 15 years the Australian stock market, on average, has fallen in September and October.

This fall has subsequently been followed by a rally in November and December in 11 of those 15 years.

History indicates that any market pull back during September and October is a buying opportunity for investors.

September is, on average, the weakest month in the market and has dropped an average of 0.46%, in eight out of the 15 years surveyed.

Similar September statistics can be seen in the US market, as the September quarter marks the end of the US tax year and the reallocation of fund managers' portfolios.

From what the RBS Morgans team of analysts can determine, the US market, on the law of averages, posts a significant rally going into the Christmas period.

Back in the Australian markets, September looks to be having a very strong rally on the back of improved economic data with the All Ordinaries index gaining 4.2% in September so far.

Given this strong market performance, it seems unlikely we will see a negative return for the month, however, the team of RBS Morgans analysts advise investors to apply some caution in the current market.

Our preference is to buy during any dips that may occur in the coming weeks, without necessarily chasing the 'up' days, or prematurely selling into the usually strong November and December period.

Based on these seasonal statistics, the RBS Morgans analysts take the view that any pull-back in the market during September and October is going to make a buying opportunity for investors with a subsequent rally into November and December.

The Australian market AGM season commences in October, which will provide the next round of outlook comments from company management and a positive catalyst if an improved operating environment is portrayed as anticipated.

RBS Morgans have conducted an analysis of stocks within the ASX300 that are currently trading below fair value.

We are now well positioned to advise our clients and any prospective investors on stocks that are rising in line with, or above, the stock market.

In addition, we can also advise investors on our selection of stocks that are demonstrating their ability to rise seasonally.

This advice is general and readers should seek their own expert advice before making financial decisions.




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