Following BIG October Gains

StockTradersAlmanac.com Alert  – What November & December could look like following big October gains

By Jeffrey A. Hirsch
CEO: Hirsch Holdings | Editor: Stock Trader’s Almanac & Almanac Investor
www.stocktradersalmanac.com

 First at hat tip to Sam Stovall at S&P Capital IQ for a nice research piece, released earlier today, titled "Stealing from Santa” which looked at big October S&P 500 gains. As its title suggests, past October S&P 500 gains in excess of 7% did tend to proceed below average gains in the November-December timeframe. Digging into our own database we found Sam’s research to be spot on. Since 1950, there have been just five previous Octobers where the S&P 500 was up 8% or more on the 17th trading day of the month; 1974, 1975, 1982, 2002 and 2011. By month end, 1974, 1982, 2002 and 2011 were still above 8% and were joined by 1998 and November and December combined produced a below average 1.9% gain.


In the following chart the 30 trading days before and 60 trading days after the first trading day in November following full-month October S&P 500 gains of 8% or more have been plotted. 20 Trading days before “0” day is approximately the end of September. 21 Trading days to the right of “0” is approximately the end of November and 42 trading days is approximately the end of December. 

Courtesy of StockTradersAlmanac.com

Following October’s massive move, it is not surprising to see a tepid November as gains are consolidated and some profits taken. However, around the middle of December (approximately 9-11 trading days on December calendar) the market found support and briskly rallied to close out the year. Buying the mid-December low (trading days 30-32 on the chart) and holding into early January (trading days 45-47 on chart or 3-5 on January calendar) saw an average move of around 7%.

For further information please contact:
Jeffrey A. Hirsch
CEO: Hirsch Holdings | Editor: Stock Trader’s Almanac & Almanac Investor
www.stocktradersalmanac.com

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This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  
Past performance is not indicative of future results