The Ghost In August For Markets

August seems to be a “low volume” trading month whether it be for the stock market or the foreign exchange. People seem to be somewhere else around the world other than in their desktops or smart phones (whatever gadget they may be using to trade equities) and most sessions in the financial markets most likely ending in the red despite that sometimes fundamental news coming out fresh are extremely positive. Observations tell that August is biased to the negative side because there is less trading, most market players are away from trading, and traders are somewhat looking for reasons to sell their positions (most probably to liquidate their positions and get away from the market, and probably to go on vacation)

Now let’s see the news that came out from Bloomberg, Reuters, and other finance news platforms recently:

• UK business confidence down after the Brexit vote…
• Japan July factory output shrinks again, but at a slower pace than last month…
• The US had a slew of disappointing data recently, declaring a “productivity slowdown” by Fed officials…
• Countries belonging to the Euro zone are still having trouble with their manufacturing numbers except Germany (signs of slowdown are seen)…
• Bank of England cut its interest rates after a long time since they last cut their rates and restarted their quantitative easing, bad for the British Pound, but good for emerging markets…
• Reserve Bank of Australia also cut rates to historical lows of 1.5% to stop deflation and bring its currency (the Australian dollar) down

Basing on the string of news that I have provided above, there may be some light to the belief that August truly is a bad month to trade, no wonder there is thin trading during this month. But of course, it is up to the traders if they’re gonna stick to this so-called pattern or will they break the belief and continue to trade.