Stocks have been sliding for months and historical patterns don't bode well. September is typically the worst month of the year for stocks. The month often starts strong — as this one did, with a Wednesday surge — then reverses course as mutual fund managers sell winners to bank quick profits, and weed out the losers in their portfolios before the final quarter of the year begins. And with the economy weakening and home sales plunging, investors already have itchy fingers poised over the sell button. Will the stock market take a dive this month? (Watch a Bloomberg discussion about the September market)
Unless economic news improves, September will be disastrous: Stocks are already "vulnerable," says Daryl Montgomery at Seeking Alpha. And if unemployment and manufacturing numbers continue to point to "a possible double-dip recession" — look out below. The Dow could be headed for a plunge that will make August's 4 percent drop — the worst for that month in nearly a decade — seem positively harmless.
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