Halloween Trading Strategy Begins Next Week | Jeff Hirsch

Next week provides a special short-term seasonal opportunity, one of the most consistent of the year. The last 4 trading days of October and the first 3 trading days of November have a stellar record the last 30 years. From the tables below:

     S&P 500: Up 25 of last 30 years, average gain 1.96%, median gain 1.61%.
     NASDAQ: Up 25 of last 30 years, average gain 2.43%, median gain 2.29%.

     DJIA: Up 24 of last 30 years, average gain 1.95%, median gain 1.39%.
     Russell 2000: Up 23 of last 30 years, average gain 2.34%, median gain 2.56%.

Many refer to our "Best Six Months Tactical Seasonal Switching Strategy" as the "Halloween Indicator" or "Halloween Strategy" and of course “Sell in May”. These catch phrases highlight our discovery that was first published in 1986 in the 1987 Stock Trader’s Almanac that most of the market’s gains have been made from October 31 to April 30, while the market, on average, tends to go sideways to down from May through October.

Since issuing our Seasonal MACD Buy signal for DJIA, S&P 500, NASDAQ, and Russell 2000, on October 11, 2024, we have been moving into new long trades targeting seasonal strength in various sectors of the market via ETFs and a basket of new stock ideas. The above 7-day span is one specific period of strength during the “Best Months.” Plenty of time remains to take advantage of seasonal strength.

Quoted from:
Jeffrey A. Hirsch (October 24, 2024) - Halloween Trading Strategy Treat Begins Next Week. 

 

 Election-Year Octoberphobia — Jeff Hirsch, October 9, 2024. 

 

 November Performance in “All Years” (1930-2015) and “Election Years” (1932-2012) 

— Jeff Hirsch, November 15, 2016.

 November Market Performance (2001-2021) — Jeff Hirsch,  October 20, 2022.

 

October 28th has, on average since 1950, been the strongest day of the year.
 

 

 S&P 500 average Performance per Day & Day by Day Hit Rate (1928-2024).

 

S&P 500 Seasonal Pattern for Q4 of the Election Year 2024
- Presidential Cycle in line with the Decennial Cycle.
 

The Cycle Composite for 2024 combines the 1-year, 4-year, and 10-year cycles. 

Trends are more important than levels. —  Ned Davis Research, October 15, 2024.

 

 S&P 500 E-mini Futures (daily bars) and current 21-Trading Day Cycle ( ± 3 TD).

 

ooooOoooo

 

Goldman Sachs' technical strategist Scott Rubner indicates that US stocks are entering a favorable trading environment due to capital flow trends. He expects the quiet period for stock repurchases to end on October 25, with listed companies likely to engage in significant buybacks in November and December, estimated at $6 billion per day, accounting for 21.1% of annual buybacks.

As mutual funds, the largest sellers of US stocks, begin to withdraw before Halloween, this may positively impact stock prices. October marks the end of the fiscal year for most mutual funds, potentially leading to sell-offs of underperforming assets for tax reasons. Rubner noted that all 756 mutual funds, valued at $1.853 trillion, end their fiscal year on October 31, 2024. Historically, American households increase stock purchases in November, with capital inflows into mutual funds and ETFs peaking during this month.

 In Q4 2024, the NASDAQ may gain more than double what the S&P gains.

Looking ahead to the US election, Rubner suggests that post-election, market volatility may reset, benefiting various trading strategies. Additionally, strong non-farm payroll growth and shifting inflation expectations are becoming critical market factors, particularly regarding a potential Trump election victory, which may reignite trading interest.

By end of 2024, S&P far above 6,000 —  Scott Rubner, October 15, 2024.

 

See also:
Steve Miller (October 25, 2024) - S&P 500 Cycle Analysis - Time and Price Projections Update (video)

October 27: Key Date for the Year-End Rally | Wayne Whaley

We examined the S&P's performance during the first nine months of 2024. The index finished September with an impressive 20.8% increase, having only faced one losing month in April, which saw a decline of 4.2%. Notably, all seven rolling quarters during this period were positive, comprising the months from January to March, February to April, and so on. This remarkable performance places 2024 among only 15 years since 1930 that experienced both a gain of over 10% in the first nine months and no negative rolling quarter within that same timeframe. It's significant to note that all instances occurred after 1950.

A closer look at the historical data from the previous 14 cases reveals a pattern: while there tends to be some weakness in the second week of October, this is often followed by an "End of Year" rally starting around October 27. In fact, 13 out of the 14 instances recorded were positive from that date through the end of the year, with only a minor fractional loss occurring in 1964. Worth noting, four of the last five years have also seen positive performances during the period from October 7 to 15.

Wayne Whaley — October 6, 2024.

When the SPX is up through 3Q in an election year, 4Q is up 89% of the time 

w/avg return of 4.98% (4.26% median), which equates to SPX 6,000 into yearend.

See also:

 Jeffrey A. Hirsch (October 1, 2024) - October Volatility After Big Gain First Three Quarters.

S&P 500 seasonal pattern for October of the election year 2024 in line with the decennial cycle — September 29, 2024.

Stephen Suttmeier (July 1, 2024) - S&P 500 seasonality: first ten sessions and last ten sessions of the month since 1928.

Jack Gillen (2009) - Year-End Rally, January Influence & Trend for the Year.

S&P 500 vs Tri-Annual, Yearly, Quarterly, Monthly, Weekly & Daily Pivot Levels

S&P 500 E-mini Futures (weekly candles) vs Tri-Annual Pivot Levels (for 2022-2024).

Based on spectrum analysis, Sergey Tarassov forcasted a multiyear high in US-stocks sometime 

around August 2024 between the crests of the 40 Month Cycle and the 42 Month Cycle. 

By then the tri-annual R1 level at 6,019 could well be reached. R2 is at 6,928.

 

S&P 500 E-mini Futures (weekly candles) vs Yearly Pivot Levels (for 2024).
Tri-Annual and Yearly Pivot Points and Levels are suitable for long-term investing or swing trading

with a time frame of several months to a year or more.

S&P 500 E-mini Futures (weekly candles) vs Quarterly Pivot Levels (for Q3 July-September 2024).
Quarterly Pivot Points and Levels are suitable for medium-term trading with a time frame of several 

weeks to a few months. They are useful for identifying intermediate support and resistance levels, 

trend continuations, and potential corrections.

.

S&P 500 E-mini Futures (daily candles) vs Monthly Pivot Levels (for (July 2024).
Monthly Pivot Points and Levels are ideal for short-term to medium-term trading 

with a time frame of several days to a few weeks.

S&P 500 E-mini Futures (daily candles) vs Weekly Pivot Levels (for July 07-12, 2024).
Weekly Pivot Points and Levels are suitable for short-term trading with a time frame of one to several

days to a week, to identify short-term support and resistance levels, trend continuations, and potential reversals.

S&P 500 E-mini Futures (4 hour candles) vs Daily Pivot Levels (for July 10, 2024).
Daily Pivot Points and Levels are ideal for short-term and intraday trading with a time frame of several hours to a day in order to identify short-term support and resistance levels, trend reversals, and potential breakouts. Daily Pivots can be used to make quick trading decisions, adjust stop-losses, or set price targets for the current trading session.

 

Pivot Points, Support and Resistance levels are calculated based on previous high, low, and close prices. These levels can identify areas, where price may bounce, reverse or break through, and where to set entry, stop-loss and take-profit orders. This technique is valid on various timeframes. Common types are Floor (Trader) Pivots a.k.a. Standard or Traditional Pivots (= all charts above), Central Pivot Range (CPR), Fibonacci, Woodie, Classic, Camarilla and DeMark Pivot Points, each type having their own calculation method.

 

Reference:
Franklin O. Ochoa Jr. (2010) - Secrets of a Pivot Boss.

See also:

Jeffrey A. Hirsch (July 10, 2024) - Soaring NASDAQ Approaching End of Midyear Rally.

Structural Characteristics of Bullish and Bearish Months | D'onte Goodridge

Traders want to find trending markets but often fail to see and understand the structural characteristics of bullish and bearish months. Both move in a similar fashion but inverse to one another. Here are the characteristics for the formation of a bullish month:

 

 

The first example is a daily chart of US Dollar versus Japanese Yen (USDJPY) during February 2023. The market was trending up. It was a bullish month. Let's identify the five key factors to a bullish month:

1. Price moves below the monthly opening price.
2. A swing low forms below the month's open.
3. Price purges a previous daily low (PDL) and reverses back to a previous daily high (PDH).
4. The market creates a market structure shift (MSS) to the upside and an Imbalance or Fair Value Gap (FVG).
5. Higher swing highs and higher swing lows form.

 

Looking at the daily candles in the USDJPY chart, we see the methodical sequence of a Bullish Month developing:
 

1. Price was movesg below the monthly opening price. Price stops below it, runs up, drops below it, runs up and continues the bullish trend.
2. A swing low below the month's open forms. This is a swing low because the candle on the left has a higher low and the candle on the right has a higher low, hence the low in the middle is the lowest point. To form a swing low  only takes three bars.
3. Price purges a previous low and works back to a previous high. The following day price reverses back to the previous daily high, all happening within a three bar setup, creating a swing low, which is a purge on the previous daily low and a reversal back to a previous daily high.
4. Next the market creates a shift to the upside with speed through a previous swing high and a FVG.
5. And price created a new swing high and a higher swing low.

The next example is a daily chart of Apple during January 2023. The same five criteria for a Bullish Month were met:

 

Now let's look at the five key factors to a Bearish Month:

1. Price moves above the monthly opening price.
2. A swing high forms above the month's open.
3. Price purges a previous daily high and reverses back to a previous daily low.
4. The market creates a shift to the downside and a FVG.
5. Lower swing highs and lower swing lows form.

 

The first example is a daily chart of British Pound versus US Dollar during August 2022. The market was trending down. Identify the above listed five criteria for the formation of a Bearish Month:

 

 

The last example is a daily chart of Gold during February 2023. Gold was in a down trend. Identify the structural criteria for the formation of a Bearish Month:

 

Reference:
D'onte Goodridge a.k.a. Forensic Forex (2023) - Characteristics of Bullish & Bearish Months. (video)  

 

 

 

See also:
Larry Williams (1998/2011) - Long-Term Secrets to Short-Term Trading, 2nd Edition.

 Michael J. Huddleston (2017) - ICT Weekly Range Profiles.

Daye (2023) - The Quarterly Theory.

 

Bitcoin April 2024 Halving - Target 150K+ by October 2025 | Peter L. Brandt

Bitcoin halvings are strongly associated with past bull market trends in Bitcoin. Also, a strong correlation exists between the halvings and the timing of the associated bull trends. More precisely, in the past the halvings have been right at the half-way point of major bull cycles. In other words, the lengths of bull trends following the halving dates have been about equal to the length of the bull trends prior to the halving dates [...]

 

The 2022 to 2025 Bull Cycle

We know what HAS BEEN in previous bull cycles. We have confidence in what we already know. But projecting past price behavior into the future is highly speculative. The next halving is April 22, 2024. Assuming that the low of the current bull cycle was in late November 2022. That low was 75 weekly bars before the April 2024 halving.
 

If the bull trend extends 75 weekly bars beyond the next halving, a price high would occur in early October 2025. If the pace of the bull trend after April 2024 is at similar pace to the bull trend since the November 2022 low, then the high in October 2025 could be around $150,000. 

 

However, the post-halving advances during previous bull cycles have been much steeper than the pre-halving advances.

 

 

 

Quoted from:
Peter L. Brandt (Feb 14, 2024) - The precocity of bull markets in Bitcoin as associated with halvings.

 

 

Jeffrey A. Hirsch (Feb 28, 2024) @ Twitter/X

 

 Bitcoin Fear And Greed Index (Mar 10, 2024)

Gold Breakout - Target 2,530 to 2,700 | Peter L. Brandt

This is a FOR REAL breakout in Gold. Goldfinger points to a target range of 2,530 to 2,700.

 

Peter L. Brandt @ Twitter/X (Mar 06, 2024)

 

June is typically the lowest month for Gold. 

The graph is based on the average prices; there are times when June tops rather than bottoms. 

Buy dips around monthly pivot levels. 

Friday’s Commitment of Traders (COT) Report from the CFTC had an interesting point about gold. The big money "commercial" traders responded to the rally in gold this week by posting the biggest jump in years in their collective net short position. This marks this week’s pop as at least a short term price top.

There has also been a big jump in total open interest lately. Usually such events mark a blowoff top in gold prices, although occasionally they are seen at a breakout point.

 Curiously, though, the small speculators in the "non-reportable" category were not chasing this week’s rally, and instead they reduced their net long position. They have not been net short as a group since 2016, so the analysis task consists in evaluating their relative net long position as a group. Having the small specs feel scared by this rally says it has some enduring legitimacy, once the short term overbought condition can get worked off. 

Tom McClellan @ Twitter/X (Mar 09, 2024)

ICT Seasonality | Michael J. Huddleston

 

 

We are in the quiet part of the year still.
Spring is coming to the markets very soon.

The year, if viewed as a single range ... we are in the Accumulation phase still.
Don't blow your equity before the salad days return.

January to April is the yearly Accumulation.
April to May is the Manipulation.
May to November is the Distribution.
December resets the yearly range.

Power of 3

Now go lose sleep over it in your charts.

You won't appreciate this until you pour
over all markets and asset classes and then your ass will hit the floor.
 

 Michael J. Huddleston

 

 Michael J. Huddleston (2017) - ICT Private Mentorship Core Content 

- Month 05 - Ideal Seasonal Tendencies. (video)

 

Time is more important than Price.

 

 

Accumulation - Manipulation - Distribution

 

 

There are two sets of instructions that the algorithm follows:  

AMD-X and X-AMD

 

A = Accumulation (required for a cycle to occur)
M = Manipulation
D = Distribution
X = Reversal or Continuation