The S&P 500 finished August with a flurry, gaining 10.7% between its intraday low on August 9 and yesterday's closing price.  That is the good news.  The bad news is that the S&P 500 declined 5.7% for the month, making this August the worst August in ten years.

Enter September, which holds the unsettling distinction of being the worst month on average for the market over the last 60 years, according to the Stock Trader's Almanac. 

The key words there are "worst" and "average."  The former stands out because it is scary sounding, but the latter is more pertinent because it implies September isn't always bad. 

Over the past 60 years, there have been some good Septembers and some bad Septembers, only the bad returns have been more material than the good returns as evidenced by the "average" decline of 0.7% for the S&P 500 in the month of September.

The $64,000 question is, will this be a good September or a bad September?

There are a lot of important events on the September calendar that will provide the answer by month's end, including but not limited to Friday's nonfarm payrolls report, a new job growth proposal from President Obama on September 8, the FOMC meeting on September 20-21, and the German parliament vote on the European Financial Stability Facility on September 29.

Right now, the month is indicated to start on a fairly flat note. 

The S&P futures are trading close to fair value as participants are showing little conviction amid a string of headlines that includes some generally better-than-expected same-store sales results for August, a weak bond auction in Spain, some generally disappointing manufacturing surveys for August out of China and Europe, and some uninspiring economic data in the U.S.

In particular, Q2 Productivity was revised lower from an originally reported 0.3% decline to a 0.7% decline (Briefing.com consensus -0.5%).  The second quarter marked the biggest drop in productivity since Q4 2008.  Unit labor costs, meanwhile, were revised up to 3.3% from 2.2% (Briefing.com consensus +2.4%) on account of the drop in output and a 2.7% increase in hourly compensation.

Initial claims for the week ending August 27 fell by 12,000 to 409,000 (Briefing.com consensus 407,000).  The market's interest in this number today is muted by the realization that it has no bearing on tomorrow's employment report and the understanding that it provides more of the same message on the labor market, which is to say an initial claims level above 400,000 suggests payroll growth will not be strong enough to lower the unemployment rate in a meaningful way.

Continuing claims for the week ending August 20 dropped by 18,000 to 3.735 mln (Briefing.com consensus 3.630 mln).

The ISM Index (Briefing.com consensus 48.5; prior 50.9) for August and the Construction Spending report for July (Briefing.com consensus 0.0%; prior +0.2%) will be released at 10:00 a.m. ET.

The ISM number will be a focal point given that the majority of regional manufacturing surveys have been weak.  That understanding could mitigate any fallout from a weak national reading, as could the presumption that bad data will support a QE3 move.

The operative word there is "could."  To be sure, there is a lot of conditionality in the current environment that makes bad news good news one day, and bad news simply bad news the next.  Fickle, then, is the defining word for this market.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial, please email researchsales@briefing.com.