August is usually a nothing month for the stock market.

Part of this is (ancient) history.

A generation ago, when heavy industry dominated the major market indices, the northern hemisphere summer was vacation time. Europe, which was much more economically important than today, pretty much shut down and headed for the beaches. The US did the same, if less vigorously. With both workers and customers away, this meant August was a time for repair and maintenance and running down inventories, rather than all-out production of new stuff.

The big financial firms shifted into lower gear, as well, with top managements heading for their summer homes on Long Island. Some managers, like me, worked remotely anyway, on the idea that the month was prone to quirky up and down movements. But by and large decision-makers make it clear that they don’t want to be disturbed.

Two things strike me as unusual, though:

–the dollar appears to be stabilizing, and, if anything, rising a bit, and

–the domestic stock market is continuing to chug along, outpacing EAFE for the first time this year. Given that the domestic-economy-oriented Russell 2000 mid-cap index continues to flatline, investors seem to continue to be emphasizing multinationals and avoiding firms with $US revenues.

The ride almost always turns bumpy in mid-September, as mutual funds begin to do their annual tax planning. Given the popularity of ETFs, I wonder if the traditional pattern of selling in late September–early October, followed by a significant rally in the runup to Halloween, will still be evident. Not a today worry, though.