By: Tom Gentile
on November 22nd, 2023
Originally published via our newsletter previously. Subscribe for early access!
August through October saw the markets sell off resulting in the S&P 500 entering in to correction territory. A correction is a pull back of 10%-220% of its recent high.
Along comes November, which is historically one of if not the best performing month for the markets. It, the S&P500, has averaged 1.7% for the month going back to 1950. That is according to my friend Jeffrey Hirsch’s Stock Trader’s Almanac.
If history proves to be consistent we should expect the bullish momentum to continue through December – no guarantees, of course, but that tends to be the case.
For this recent rally and for the potential for it continuing a bit longer, we should all be thankful.
And on that note let me and my team wish you all a very Happy and Blessed Thanksgiving Day.
Market in Focus: SPX: S&P 500 Index
The S&P 500, which is considered by many, the benchmark index even over the Dow Jones Industrial Average has only declined for the month just once in the past 11 years (2021).
In more recent years it has performed even better. In the past five years, the S&P 500 gained 4.1% on average.
Per MarketWatch, the S&P 500 index exited correction territory on Monday, and it was less than 1% away from its 2023 closing high set on July 31.
The S&P 500 has been the best performing index so far in November when compared to the Dow Jones Industrial Average and the NASDAQ. Note: All three are showing gains for the month.
Tools and Observations
We are pretty much through with November. We have one week to go and then the question begs, can it continue through December and how well has it typically done? It being the S&P 500, since that is considered the benchmark index as previously mentioned.
One of the many wonderful scanning tools I have in my online software is a variation of my seasonal scanning tool Money Calendar and that is called ‘Money Holidays’.
It allows all who use it to be able to look at a security (stock or ETF) and see how it has performed on a point and percentage basis either a number of days up to 20 prior to or past a national holiday. You can even ‘bracket’ the days with an analysis of a number of days up 20 prior to AND post the national holiday.
Let’s look at the S&P 500:
The image shows the data when looking at a past 10-year history of the Average Price and Average Percent move of the SPY, (which is the tracking ETF for the S&P 500),
The results do not guarantee the security will perform in the same fashion this year, but it is nice to observe past results to anticipate a pending price and/or percentage move. 20 days after Thanksgiving. This gives us a look at what the SPY has done prior to Christmas Day.
Over this amount of days post-Thanksgiving there was a down pattern, but it lasted only 2 days.
The other three years saw a positive move over the number of days shown with the best percentage move highlighted in grey.
All three up years show the SPY trading higher at a success rate of 70%, or 7 of the past 10 years.
Those are odds I can live with. I am not saying this makes me want to only consider the SPY as a security to build an option trade around, but it further enhances my bullish conviction for the markets in December.
— Tom Gentile
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