S&P 500 Extends Winning Streak to Six Days; Dow Makes the Most of Big Changes

So much for a scary September.

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Markets rallied again today, and if a downer of a month is destiny, we’ll have to wait a wee bit longer. The S&P 500 gained 0.7% to 1,683.99 today, while the Dow Jones Industrial Average rose 0.9% to 15,191.06 on a day when big changes were announced for the index.

Today’s rally continued a trend that has belied September’s bad reputation. Consider: Six trading days into the month–and nearly a third of the way through–the S&P 500 has gained 3.1%, and has yet to finish in the red. That’s it’s longest winning streak since July. The Dow Jones Industrial Average, meanwhile, rose fifth time this month, only interrupted by Friday’s 0.1% decline. It’s now up 2.6% so far this month.

Yes, investors are finally feeling some love for risky assets, as the big risks appear to be subsiding. A hard landing in China? Not yet. A U.S. attack on Syria? How about we give peace a chance? Even the beginning of the end for the Fed’s bond buying might not be such a worry if much of the potential damage is already priced in.

Or maybe not. I spoke with Barclays’ Barry Knapp today and he believes September could get a whole lot tougher. That’s because when the Federal Reserve begins tightening monetary policy–and yes, the end of QE qualifies–the market almost always falls, usually about 7% to 9%. “The market will turn more negative next week as it becomes clear the Fed will start to taper,” Knapp says. “I don’t think September is over.”

And even if that correction doesn’t occur this month, recent history suggest that the big September gains–or losses–in the S&P 500 come early in the month. According to my own admittedly shaky math, the S&P 500 gained 1.9% during the first six days of September in 2012, only to rise 2.6% for the entire month. In 2011, the benchmark fell 5.3% during the first six days of the month and finished down 7%. And in 2010, the S&P 500 gained 5.2% during the first six-trading days and closed September up 9%, a big gain, yes, but more than half the return was earned during the first third of the month.

Who’s feeling like a little risk taking?

Not investors in Restoration Hardware (RH). Its shares have dropped 2% in after-hours trading after it reported a profit of 49 cents a share, above forecasts for 43 cents, but offered mixed guidance. Oxford Industries (OXM) is off 7.3% at $60 after it announced a profit of $1.01, ahead of 98 cents consensus forecasts, but lowered its 2013 guidance. Shares of SunEdison (SUNE) have dropped 5.4% to $7.90 after it announced a secondary offering.

But it hasn’t been all bad news. Lannett (LCI) has gained 1.9% to $16.00 after it reported a profit of 12 cents, above the 7 cents forecast by analysts. And shares of Krispy Kreme (KKD) are unchanged after the company said it would earn 59 cents to 63 cents in the slides for a presentation tomorrow. Considering what happened the last time Krispy Kreme opened its mouth, that has to be considered good news.