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Bearish sentiment could curb selling in stocks’ weakest season

Ned Davis Research notes that this typically weak seasonal period may see reduced downside if investor pessimism stays elevated.

Reported · Written up by our desk · Fund Industry

U.S. stocks are heading into what has historically been their weakest stretch of the year, MarketWatch reports, citing analysis from Ned Davis Research.

The report says that while the seasonality backdrop is typically unfavorable, unusually bearish investor sentiment could act as a stabilizer and limit how much prices fall during the pullback window.

The idea is that sentiment that is already extremely negative may leave less room for additional selling pressure, even as the calendar turns toward the period that tends to underperform.

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