From a seasonal perspective, September and October are typically the most perilous two months of the year. However presidential election years are historically strong for the market, as the incumbent party pulls out the stops to provide a successful financial backdrop that improves their chances.

So which vector will prevail? Well, rather than looking at all Septembers and Octobers I have always found it more useful to look at ones in which the market was the most similar to the present.

I queried the Logical Information Machines database to see how the S&P 500 has tended to perform following September 2nd when it has been below its 200-day average and in the lower third of its one-year trading range.

The answer: This configuration has occurred 16 times in the past, and the market has fallen in 14 instances by an average of -5.4% over the next five weeks.

One of those instances was in a presidential election year, 1940, and the market was higher over those five weeks by 1.6%, and then went on to record a 3.9% gain in seven weeks. Yet that was probably not a good year for comparison, as the country was then gearing up for war against Germany (and eventually Japan) while emerging from a decade-long economic depression.

In summary, the seasonal tendencies right now are pretty negative. Keep in mind, though, that Octobers have often marked major market bottoms—so that would be a month to be especially ready for a powerful upward reversal if it starts very negative.

At times like these, it’s more important than ever that we look deeper than fundamentals and the index values to understand what is happening in the supply and demand for stocks. And that is the role that buying and selling pressure plays in my view of the major market trend. (See also: "Remain Skeptical of the Market Bounce.")

History shows that the final stage of virtually every bear market in the past century has ended with a period of panic selling punctuated by at least one and usually several 90% downside days. Market historian and statistician Paul Desmond says that kind of super-charged selling sates sellers’ desire to shed stocks, and more importantly reduces the overhead resistance of stock bought at higher prices. It also drives prices down to such low levels that they can attract broad, enthusiastic demand from sidelined investors.

In the current instance, however, the only recent 90% downside day was recorded three weeks before the big-cap indexes’ mid-July low. So that did not conform with a pattern Desmond and his team of analysts have observed before every major market bottom during the past 75 years.

If there had been a typical pattern of total washouts, then they would typically have been followed by at least one day in which 90% of stocks rose and 90% of total volume was up. Yet none of these kinds of extremely positive days of buying have occurred, which makes this period different than the start of all bull markets in the past century. 

The reason such a consistent pattern of strong accumulation occurs at the start of new bull markets is that investors should consider stocks to be incredible bargains—the deals of a decade. Breadth should be very broad, upside volume should explode, and both should continue to improve for weeks and months—a pattern we most recently saw in the spring of 2003 after stocks had crashed for three years.

At present, all of the advance-decline lines are flaccid, while total trading volume has contracted, sinking from 7.3 billion shares on July 15th to 3.8 billion shares on August 28th. According to seminal research on bull and bear markets by Desmond and his crew, these are all patterns seen in bear market counter-rallies, not the start of new bull markets.

It’s possible that investor psychology may have changed, or new "dark pools" at electronic trading exchanges may be skewing the data. But both attempts at an "it’s different now" explanation are a long shot.

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Jon Markman is editor of Trader’s Advantage and a regular contributor to InvestorPlace.com. To get this type of actionable insight from Jon and other InvestorPlace Media experts go to www.InvestorPlace.com today!