Posted: 23 Oct 2020 02:00 AM PDT
Next week provides a special short-term seasonal opportunity, one of the most consistent of the year. The last 4 trading days of October and the first 3 trading days of November have a stellar record the last 26 years. From the tables above & below:
Dow up 77% of the time, 20 of last 26 years, average gain 2.05%.
S&P up 85% of the time, 22 of last 26 years, average gain 2.11%.
NASDAQ up 85% of the time, 22 of last 26 years, average gain 2.67%.
Russell 2000 up 77% of the time, 20 of last 26 years, average gain 2.31%.
Many refer to our Best Six Months Tactical Seasonal Switching Strategy as the Halloween Indicator or Halloween Strategy and of course “Sell in May”. These catch phrases highlight our discovery that was first published in 1986 in the 1987 Stock Trader’s Almanac that most of the market’s gains have been made from October 31 to April 30, while the market tends to go sideways to down from May through October.
Recent market weakness has held off our Seasonal MACD Buy Signal so far, but it could trigger anytime now. Uncertainty abounds with surging covid-19 cases, a heated presidential election and persistently elevated unemployment. However, each day that passes is one day closer to a covid-19 vaccine. Interest rates are low and ample liquidity is available to support the market and the economy. Additional fiscal stimulus also appears to be coming soon. Debate continues on the amount, but both parties do appear to agree it is needed in one form or another.