Equityclock.com is offering free access to a data base showing seasonal studies on individual stocks and sectors. The data base holds seasonality studies on over 1000 big and moderate cap securities and indices. Free services are available for this summer only. Enjoy while available!
The Stock Market Outlook for August 26th, 2010 HERE
Combining Seasonal Investing with Technical Analysis HERE
By definition, seasonal investing includes:
- A start date for an investment
- An end date
- Either price strength or weakness between the start and end dates for the chosen equity, sector, index or commodity.
…..as above, more HERE
One of the greatest myths on the Street is that North American equity markets usually experience a “summer rally”. Traders frequently start talking in May about the possibility of a rally in the stock market in the June to August period. Talk by traders normally escalates during a period when North American equity markets are experiencing a short term correction. The message is “Don’t worry, be happy. The market will come back”. A long term study of the market confirms that a rally lasting three weeks or more inevitably happens during the three month summer period. However, traders fail to mention that the three week rally period has no consistency. Timing of the appearance of the three week rally is random and can appear at any time during the three month period. Of greater importance, traders fail to mention that virtually all three month periods during the year record at least one period of recovery lasting three weeks or more regardless of season.
Another myth is the expression “Sell in May and go away”. The myth originated from an actual period of seasonal strength in the base metal sector. Base metal prices as well as base metal equity prices tended to peak early in May and bottom near the end of September. The main reason was the annual operating shut down by base metal smelters in Europe in July and August for Europe’s extended holiday season. Demand by smelters for base metal concentrates slowed in May and recovered in September. Currently, base metal prices continue to show this seasonal pattern, but the pattern has been muted over the years. Market share of base metal smelter capacity in Europe has declined while market share in the Far East and South America has increased. Over the past decade, the “Sell in May and go away” phrase became adopted by the media, but with a slightly different twist. The phrase was transformed into expectation for weakness by broadly based North American equity indices such as the S&P 500 Index and the TSX Composite Index from the end of May to the end of September. The myth is not supported by fact. The S&P 500 Index and the TSX Composite Index has gained in five of the past ten periods from the end of May to the end of September. Unlike the period of seasonal strength by North American equity markets from the end of September to the end of April, performance in the May to September period is random. This period does not have a sufficient number of annual recurring events to influence equity markets.
Another myth is that the month of October is a weak and dangerous month for North American equity markets. The myth is based on the fact that substantial downdrafts in North American prices have occurred in the month of October. October 1929 and October 1987 are seared into the minds of traders. However, data during the past ten years suggests that fears of weakness in October no longer are founded. The S&P 500 Index has advanced in five of the past 10 periods and the TSX Composite Index has gained in seven of the past 10 periods. On the contrary! October frequently is the month of the year when important seasonal lows frequently are reached.