Charts suggest the stock market’s September struggles may get ‘even uglier,’ says Jim

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CNBC’s Jim Cramer said Friday investors should be prepared for more struggles on Wall Street throughout September, based on technical analysis from longtime chartist Larry Williams.

“The charts, as interpreted by Larry Williams, suggest that the rest of September could be even uglier than the month so far. If history’s any guide, then the last week of September might be particularly brutal, so I need you to steel yourself,” the “Mad Money” host said.

Cramer analyzed a few different indicators provided by Williams, including his True Seasonal Index for S&P 500 futures contracts in September from 1998 to the present.

A chart from technician Larry Williams that shows the S&P 500 futures seasonal pattern from 1998 to 2021.

“Mad Money”

“The pattern hasn’t changed all that much” since 2001, when charts also warned it could be a rough September even before the 9/11 terrorist attacks took place, Cramer said.

“Williams points out that the optimal seasonal sell point continues to be the same — around September 17th. … This is when prices tend to experience a precipitous drop,” Cramer said. “If history’s any guide, there’s a high probability this market will get hit with a meaningful decline at the end of this month, which is one reason, I think, it’s been so soggy for the last week.”

The S&P 500 and Dow Jones Industrial Average have both fallen for five consecutive sessions, as Wall Street navigates what has been, on average since 1945, the worst month for the S&P 500.

Cramer said it’s important to understand history because traders are very attuned to it, but “ordinarily, I wouldn’t be too worried about this kind of thing.”

However, this year when factoring in the Covid delta variant leading to an economic slowdown, “fear of the Federal Reserve and the possibility of a debt ceiling debacle in Washington, the September sell-off … can easily become what I call a self-fulfilling prophecy,” Cramer said.

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