September can be tough on the markets but don’t automatically expect the month to be a down one for U.S. stocks, especially in an election year.

“September has historically been rough for investors. With an average annual return of -1.0% for the S&P 500 over the past 40 years, September’s bad reputation seems well deserved. However, if you focus on more recent history, only two of the last eight Septembers have had negative returns, and the SPX has managed to post a modest average gain of +0.5%,” says from Randy Frederick, Managing Director of Active Trading and Derivatives at Charles Schwab. “While that’s not exactly robust, it’s a gain none the less.”

When looking solely at election years, the market’s performance in September has remained relatively flat since 1900, rising 15 times and dropping 13 times. [Will September be Cruel to Stock ETFs?]

August was characterized by a low-volume melt-up in stocks, but several key news events this month could ratchet up the volatility.

“Spain is expected to ask for more aid, Germany and the Netherlands are expected to rule on the constitutionality of the ESM (European Stability Mechanism), and at just about the exact same time, the next FOMC meeting will occur and talk of QE3 will once again be on everyone’s mind,” Frederick said in a note Tuesday. “These could all be market moving events.”

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