chart: May S&P Sets All Time High

When the May S&P Sets an All Time High
By Wayne Whaley
May 13, 2014

Since 1950, the S&P is 46-18 over the seven month June-December time frame for an average/median gain of 4.54/5.88%. On May 12, 2014, the S&P closed at an all time high of 1896.65. In those 20, post 1949, years in which an all time high was set during the month of May, the last seven months of those calendar years has done much better than the norm, going 17-3 for an average/median return of 8.09/8.04% Eight of those 20 years had +10% June-December while a double digit loss has never occurred in the seven months following an all time May High.

Courtesy of Wayne Whaley

Based on the above findings of Wayne Whaley through 2013, let's try and see how this data might be able to help us in 2015.
1) All of the years are when there was an All Time High in May

So what is different this year? An August sell off and a big October rally.  Then let's look and see what years come closest to a May All Time High, an August sell off and a big October rally. 

2) There are two years that are close to an August sell off.  1986 & 1990
3) Big October rallies. 1985, 1986, 1999 & 2013
4) Which year noted in #3 and #4 above comes closest to the events in 2015 ?
1986 seems to come closest.  If you were to pick 1990 because of the August sell off instead of the September sell off in 1986, the balance of the year was still off -8.58%.

The other two years, 1999 & 2013, although they did well for the balance of the year, they were not picked because they did not have a material sell off in August & September or June & July either.

2014 - What happened for the balance of this year?
1) May All Time High
2) 2014 had both an October correction in the first half of the month and a big rally in the second half of the month that allowed October to close with a small gain.
3) The stock market did not gain much traction between Oct 31st and Dec 31st  with some similarities to the second half of 2015.   2014 did pick up approx 8% from May 12,2014 to December 31,2014.

Conclusion:
Today is Nov 17,2015.  What might happen between today and the end of the year?   So far Nov 2015 has a small loss to date.   
Scenario #1 - If we pick a year in the chart above that most resembles the May, Aug/Sept & Oct periods in 2015, that year is 1986.  Going forward the total of Nov & Dec in 1986 was flat.   
Scenario #2 - The short term cycles suggested a low today and instead the low occurred with the pre market futures yesterday morning.  Going forward the cycles suggest a, high 11/22+/-, low 12/5+/-, then some backing and filling in Dec with a bias up into year end.

So both of these scenarios do not suggest a big year end rally, unless there is a scenario #3 of course.

NOTE - The DJIA & the S&P500 are both  currently lower than their May 2015 highs.  See the chart above, this also happened in 1986, -2,09% from June - December 1986.

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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