September is a Reliably Tough Month for Semiconductor Stocks
While calendar-based tendencies should be respected, they're not necessarily to be traded as if they're infallible. In other words, while some sectors or groups are known to perform better (or worse) at a certain time of year, there are always exceptions to the rule.
On the other hand, sometimes the suggestion and odds of a cyclical tendency are overwhelming. One of those rare, high-odds phenomenon is the weakness from Semiconductors and related equipment stocks generally seen between early-September and early-October. Whether it's shaping up to be a good year for the group, clearly a bad year, or just an average year, this industry's names almost always struggle for a month or so beginning at this point in the year.
The chart below tells the tale. Even when the bigger trend is bullish, the Semiconductor stocks (SMH) tend to peak around September the 12th and pull back to the tune of a couple percentage points. In a bad year, the group loses 12% of its value. On average, semiconductor stocks lose nearly 7% in the month of September and into early October.
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Clearly 2016 to-date is a better year than average. And, we may well defy the odds this year, rallying through the end of this month. That's a low odds outcome, however.
Just be ready to stop and turn on a dime with any semiconductor trades, as this is a tendency that holds true in September far more often than not.