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Seasonality Tendencies

Updated: Oct 29, 2019

The local radio station played the popular folk-rock band Byrd’s song “Turn, Turn, Turn” which goes like this - To everything there is (turn, turn, turn), there is a season (turn, turn, turn). And a time to every purpose…


Just like the years has four seasons, the market also has seasons or seasonal patterns. Each year, the stock market tends to repeat with certain defined seasonal trends. These seasonal tendencies can affect individual stocks, sectors, client portfolios, and even the stock market in general.


Astute and experienced traders and investors are aware of these seasonal trends and will take advantage of these technical conditions. There is no guarantee that it will work again this year. However, understanding these seasonal trends will allow an investors/trader to have a higher conviction level or higher confidence that a trade/investment will be successful.


So, as the market enters the strongest 3-consecutive months of the year from October to December months, we would like to review these seasonality statistics and the implications for key U.S. stock indexes.


Instead of running the last 20-years or the last 50-years or even the last 100-years as so many have done so in the past, we have taken the last 7-years. Why? We believe the current structural bull trend began in earnest on May 2013, and as such we would like to focus on the seasonal tendencies during this time period.


In the past few days key US indexes have recorded new all-time highs, while others are close to their record highs. Based on current market conditions we expect next month (November 2019) may be especially strong. A brief review of the histogram charts attached below show stock indexes are very strong during the month of November as these indexes tend to close at a higher level than the prior month. In addition, stock indexes have produced above average monthly returns during November in the past 7-years. Although, many studies suggest December to be a strong seasonal month, the enclosed histogram suggest otherwise. Rather, a strong rally from October to November have led to a consolidation or a correction during December. Will this phenomenon again be repeated this season?


Source: Courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com


Source: Charts courtesy of StockCharts.com

Source: Charts courtesy of StockCharts.com

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