The Halloween Indicator

The S&P 500 Index was up 15.03% year to date as of the end of October, and it also has closed higher for the eighth consecutive week —marking the first time since 2013 that this has happened. Today we will take a closer look at both of these rare occurrences and why they could be a good sign for the bulls.

Historically, November and December have been two of the strongest months of the year for the S&P 500; and, since 1950*, the combined average return during these two months has been a very solid 3.2%. Here’s the catch: When the S&P 500 has been up a lot coming into these two months it has tended to do even better. Per Ryan Detrick, Senior Market Strategist, “Wouldn’t you know it, but when the S&P 500 has been up 15% or more year to date as of Halloween, the rest of the year has been higher 16 out of 17 times, and the average return has been better than the average year.” In other words, strength begets strength.

It doesn’t stop there though, as the S&P 500 has been up eight straight weeks in a row currently. Once again, these long streaks of equity strength have tended to result in stronger than average future returns, with the average return 4 weeks, 8 weeks, and 12 weeks after an eight-week win streak having been stronger than the average returns over these same periods.

This is the feel-good time of the year, and that usually means equities benefit. One might think that the impressive run so far this year could lead to a well-deserved pullback and the Grinch showing up, but these studies suggest that if there is a pullback, it could be a nice buying opportunity.


*Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.

Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

The economic forecasts set forth in the presentation may not develop as predicted.
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Stock investing involves risk including loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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