What is Stock Market Seasonality
The Stock Market is not an exact replica of its past self, but many people look to the past data to make future predictions. Things such as technical and fundamental analysis are both done based on past data and how a stock or the market acted at certain points. Seasonality in the stock market is just another historical data point many like to use to determine when to trade and make a prediction for the direction of a certain month or season.
What is the most positive season in the market?
The market has historically seen the bulk of its rise during the seasonal trend from November to April. Dating back to the mid 1900’s the S&P 500 has seen roughly a 6% annual gain from November to April compared to a 2% gain from May to October. Of course, this is not guaranteed to play out every year and it can be contradicted in the future.
Sell in May and Go Away!
Seeing that the most positive trend in the past has occurred from November to April there has been a saying speaking on the historically weak seasonal trend. The saying is “Sell in May and Go Away.” The summer months on average in the past have been weaker and many traders and investors alike suggest to sell in May and return when the seasonality picks up in November. However the S&P500 has still seen gains throughout the weak seasonal trend from May to October, just a much weaker one historically than November to April.
The stock market has many past historical data points that we like to use and share for your future investing journey. It is important to use other data points as well and not center your trading plan on just one factor such as seasonality. Till then, stay safe and keep learning!
Your Fellow Stock Hackers
Erwin and Cherry
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Happy trading and investing,
Your fellow Stock Hackers,
🍒Cherry & Erwin
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