Why investors should be on high alert heading into September

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In markets as in movies, suspense builds through the slow, quiet scenes of the second act.

The stock market is doing just enough, through slim trading volumes and narrow index trading ranges, to escape August with its uptrend intact.

The S&P 500 is within half a percent of where it closed three weeks ago. It has slouched and equivocated in the two weeks since it hit the last record high just above 7800.

But the index has stayed within 2% of the peak, the pullbacks so far halting a handful of points above what had been the top of the former multi-month range.

Sure, the upwelling of relief that greeted Nvidia’s strong results and bold guidance was dramatic. But for the full week, the stock was up just 1.3%, back to levels from three months earlier.

Semiconductors as a group held right where they “should” have, preserving the path of their post-July rebound.

The market, in other words, has done its best not to do anything that would require disturbing the portfolio managers at the beach.

This is where one is conditioned to expect a discussion of calm before storms, of late-summer hurricanes and the punishing realities of September markets.

Yes, as is noted everywhere, September historically is the worst month of the year for stocks. But it’s utterly unclear what one is meant to take from this fact, other than to keep expectations muted – which is always advisable in my book. Given most late-summer midterm-election-year weakness has been more than recovered right afterward, the proper course of action now becomes even more obscure.

There is massive variation around historical monthly return patterns.  When stocks have already been strong in a given year, as they have in 2026, September has been less scary.

The ranking of monthly performance changes significantly if one goes back 20, 80 or 100 years. None of these spans truly represents a statistically significant sample. And of course, this is all about calendar months, not every possible 30-day slice of market history.

The Vix, 10-Year Treasury yield at key levels

Given all this, I’d argue the reason to be alert now is not purely the turn of the month, but the fact that – much like the S&P and the semis in August – various key market metrics are coiling near consequential thresholds, which if they’re crossed could imply a change in market character.

The CBOE S&P 500 Volatility Index (VIX) has slipped below 15. Appropriately so, given the placid recent range and the clockwork mechanics of sector rotation and low-correlation restraining index-level volatility.

Still, much below 15 gets away from “comfortable stability” and toward “eerie complacency” territory. Historically, this time of year, vol is biased pretty clearly higher. For now, the VIX futures curve is sloped healthily upward into coming months, but things can shift in a hurry.

The 10-year Treasury yield has nudged back above 4.7%, reacting in part to…