Published July 24, 2026
Investors with longer memories know all to well the hazards of the late summer/early fall. The Great Financial Crisis began with a seemingly one-off announcement in August 2007. By September of 2008, it was a full-blown crisis. Then, the August budget wrangling of 2015, which gave trend-followers a severe headache. Market volatility spiked amid a sharp selloff in August, followed by a weak September, only for October to reverse course and recover the entire loss in a matter of days. Volatility.
Below is a recent article from Lawrence G. McMillan discussing the historical volatility trends in this time of the year.
“Investors used to think of August as a dull month for the market. That is not really true. July is the dull month; beginning in August, volatility increases and generally rises into October.
This is a seasonal pattern that is verifiable from the accompanying chart of “seasonal VIX,” going back to 1989. Look at the chart below: Early in the year, there is often a volatility increase. It was recently most prominent in March 2020 and April 2025, and it is noted in the chart by VIX rising into point “A” in mid-March, using all the years in question.
Then volatility begins to lag, as the market generally rallies, or is at least complacent, into July. That brings the composite VIX chart down to point “B” — its low for the year. We are there now.
Then it’s August — often a volatile month in terms of both realized and unrealized volatility. The market often experiences turmoil into October, and VIX rises with it. October is often a month of severe declines. But it is also known as the “bear killer” because the market has bottomed in October many times as well — halting those severe declines. (That is point “C” on the chart.) From there, VIX declines into year-end and the market will often rally. Then the cycle begins again.
Not every year fits this exact pattern, of course, but the general flow is as shown in the chart. All too often, the VIX rises in August and catches traders unprepared.”
Market Update
Coming off a very poor week semiconductor stocks found some buyers Monday. But increasing tensions in the War with Iran pushed oil prices and interest rates higher to dampen the enthusiasm. The broad market rebounded +0.3% Monday. A proposed ceasefire combined with a favorable inflation report generated a risk-on day in stocks Tuesday. The result was a +0.9% gain for the S&P 500. Wednesday offered no follow-through to the rally, however. Oil prices resumed their climb while tech investors stepped aside ahead of after-hours earnings reports from Alphabet and Tesla. Those reports disappointed investors leading to a -2% drop in the Nasdaq Thursday. Falling unemployment claims and oil prices topping $100 kept investors away from bonds leading long-term interest rates to their highest level in three years. Strength in real estate shares, Apple and other defensive sectors kept the market reasonably stable Friday. It was a mixed day with the S&P 500 flat while the Nasdaq was down another -1%.
Stocks held up reasonably well given the notable headwinds of rising interest rates and concerning tech earnings reports. The S&P 500 dipped a very modest -0.59% and held its 10-week support line. The Nasdaq 100 (QQQ) was down -1.60% and falling further below the $700 support level. Small cap shares slipped -0.98% but also held their 10-week support line.
Warm wishes and until next week.