The stock market may have finally lost its upward momentum after a long rally, and it comes as Wall Street is entering one of the most worrying stretches on the calendar. History shows September is the weakest month for investors, but a pattern within the month suggests the worst is yet come. Since 1983, the S & P 500 has averaged a decline of 0.6% during September, but the final third of the month tends to be the weakest, according to Bespoke Investment Group. "The first third of the month tends to be flat going back to 1983 and has a more negative bias when looking just at the last ten years. The second third of the month, however, takes on a more positive tone with the S & P 500 peaking towards the middle of the month before selling off again in the final ten days of the month and finishing near the lows of the month," Bespoke said in a note to clients. In fact, it appears the S & P 500 usually peaks around the 17th day of the month, according to Bespoke's data. This year, that day is Friday, and it coincides with the expiration date for stock options, index options, stock futures and index futures — a quarterly event that is variably called "quadruple witching" or "triple witching." There are many theories about how this convergence of options activity, which can cause high trading volume, impacts markets. However, history shows that a dip for stocks ahead of the event signals more weakness the following week, according to the Stock Trader's Almanac. "Down weeks tend to follow down [Triple Witching Weeks] is a most interesting pattern. Since 1991, of 39 down TWWs, 27 following weeks were also down," the almanac reads. LPL chief market strategist Ryan Detrick said it is not clear why the market tends to soften in the final days of September, but it could be related to professional investors altering their portfolios before the end of the quarter. "What I think makes sense is a lot of hedge funds have their fiscal year end in September, so you can have a lot of late year hedge fund movement ... It's also obviously the end of the quarter, before the fourth quarter," Detrick said. So you kind layer those two things together, and that is one potential reason we've seen a good amount of weakness in the second part of September." He added that it could also be caused by investor wariness of October, which has historically seen some dramatic market declines despite being a positive month on average. These factors and the recent slide for stocks have led CNBC's Jim Cramer to warn about a negative intraday trading pattern that has emerged over the past two weeks — when the stock market opens higher, traders who are looking to sell take advantage and the market fades later in the day. "I think they're just trying to get ahead of what has been, historically for 20 years, a very difficult time for the market. ... The momentum sucks people in, and then people lose money. We've got to be a little more cautious," Cramer said on " Squawk Box " on Wednesday, in reference to the back half weakness seen in September starting around the 17th. Cramer did add that, given this trading appears to be based on historical patterns, that could be a good sign that the market's weakness is temporary and not the start of a long-term decline.
