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November and Seasonality Trends

November is one of the better months of the year for many key stock market indexes in the past seventy years and most recently over the past two decades. It is also the start of the stock market’s bullish six-month period from November to April.


With one plus month before the end of the year, many indexes are down substantially on a year-to-date basis. The S&P Index (SPX – 4,003.58) fell 16.00% YTD. Dow Jones Industrial Average (INDU – 34,098.10) weakened 6.16% YTD. NYSE Composite Index (NYA – 15,481.76) lost 10.42% YTD. Nasdaq Composite Index (COMPQ - 11,174.41) plunged 28.58% YTD. Nasdaq 100 Index (NDX – 11,724.84) also plummeted 28.16%. S&P 400 Mid Cap Index (MID – 2,545.92) dropped 10.42% and S&P 600 Small Cap Index (SML – 1,228.46) declined 12.36% YTD.


Although most indexes are decisively lower, favorable seasonality trends can help to extend the mid-October 2022 oversold rally. November remains one of the top-performing months of the year due to the influx of money, including fourth-quarter cash inflows from professional money managers and institutional investors.


For the SPX Index, November is the third-best month of the year. In the past 20 years, SPX has averaged gains of 1.7% for November and 1.3% for December. The day before and after Thanksgiving favors the bulls, as SPX is up over 75% of the time. November is also the start of the best six months of the year for stocks. Historically, investors tend to anticipate this trading phenomenon by increasing their bullish stock positioning into November.


Like SPX, the Dow Jones Industrial Average is bullish during November and December. In the past twenty years, INDU has returned on average gains of 1.9% for November. The seasonality strength continues into December with average gains of 1.4%.


NYA is bullish into the last three months of the year, with average gains of 1.1% (October), 1.5% (November), and 1.6% (December).


In the past 20 years, the broad-based COMPQ has had average gains of 1.6% during November and 1.0% during December.


The mega-cap technology-laden NDX has returned on average of 1.6% during November, placing it as the fourth-best month of the year, just behind April (2.4%), July (3.6%), and October (2.1%). NDX also generated average returns of 0.8% during December.


MID is also noted for strength into the last two months of the year. It is tied as the best month of the year with April, with average gains of 2.4% during November and 1.5% during December.


Small caps (SML) produced half of the yearly returns during the last three months of the year with average gains of 1.4% in October, 1.6% in November, and 1.7% in December.


With the upcoming holidays, can this translate into higher stock prices toward the end of the year?


Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

Source: Courtesy of Stockcharts.com

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