Wednesday, January 1, 2025
S&P 500 Post-Election Year Seasonal Patterns │ Jeff Hirsch
Tuesday, December 24, 2024
2025 US Stock Market Outlook │ Larry Williams
- On the positive side, there are no immediate signs of a US recession, with strong employment figures and a labor market expected to improve in early 2025. Business conditions remain stable, and historically, stock markets tend to perform well in the first year of a presidential term.
- However, there are risks, including potential profit-taking after a strong 2024 market, the uncertainty surrounding trade policies and tariffs, and the unpredictable actions of the Fed, Congress, and business leaders like Elon Musk.
- On the negative side, market valuations, such as high price-to-earnings and Shiller CAPE ratios, suggest that the market is overvalued, which increases the risk of a correction. Additionally, industrial production is underperforming, which could hinder economic growth, and inflationary pressures from the excessive money supply expansion since the COVID-19 pandemic may contribute to market volatility.
Given the current very high valuation ratios, the 2025 forecast indicates slower growth and market underperformance compared to historical averages. Therefore I don’t foresee a runaway bull market in US stock indices in 2025, and volatility is likely to be a key characteristic, with short-term rallies and corrections. Very long-term market cycles suggest we are at the beginning of a prolonged period of sideways movement, with the next major bull market not expected to begin until around 2038.
Regarding a major crash that some are constantly talking about, I don't see it occurring in 2025 either. While the market will be challenging, the overall bias will lean toward the upside.
Larry Williams ( December 20, 2024) - 2025 Market Outlook: The Good, Bad, and Ugly. (video)
See also:
Larry Williams (December 31, 2024) - Forecast 2025.
Wednesday, December 4, 2024
December Stock Market Performance in Election Years | Jeff Hirsch
Trading in December is typically holiday-inspired, driven by a buying bias throughout the month. However, the first part of the month tends to be weaker due to tax-loss selling and year-end portfolio restructuring. Over the last 21 years, December’s first trading day has generally been bearish for both the S&P 500 and the Russell 2000. A modest rally through the sixth or seventh trading day often fizzles out as the month progresses. Around mid-month, however, holiday cheer tends to take over, and tax-loss selling pressure fades, pushing the indexes higher with a brief pause near the end of the month. In election years, Decembers follow a similar pattern but with significantly larger historical gains in the second half of the month, particularly for the Russell 2000.
This serves as our first market indicator for the New Year. Years when the SCR fails to materialize are often followed by flat or down markets. Of the last seven instances where our SCR (the last five trading days of the year and the first two trading days of the new year) did not occur, six were followed by flat years (1994, 2004, and 2015), two by severe bear markets (2000 and 2008), and one by a mild bear market that ended in February 2016. The absence of Santa this year was likely due to temporary inflation and interest rate concerns that quickly dissipated. As Yale Hirsch’s now-famous line states, “If Santa Claus should fail to call, bears may come to Broad and Wall.”
Wednesday, November 6, 2024
Presidential Election Day to Yearend Historically Bullish │ Jeff Hirsch
S&P 500 up 66.7% of the time, with an average gain of 2.03%.
NASDAQ up 76.9% of the time, with an average gain of 1.50%.
Russell 2000 up 61.5% of the time, with an average gain of 4.93%.
Overall, from Election Day to year-end, the DJIA is up 72.2% of the time, with an average gain of 2.38%. The S&P 500 is up 66.7% of the time, with an average gain of 2.03%. The NASDAQ is up 76.9% of the time, with an average gain of 1.50%, and the Russell 2000 is up 61.5% of the time, with an average gain of 4.93%.
Tuesday, November 5, 2024
Bullish Novembers in Election Years Have Weak Seasonal Points │ Jeff Hirsch
The first 5-6 trading days are typically bullish, followed by weakness in the week before Thanksgiving. The DJIA and S&P 500 strength has shifted to mirror the NASDAQ and Russell 2000, with the most bullish days occurring at the beginning and end of the month.
Alternative approach: 4-Year Presidential Cycle in Line with the Decennial Cycle.
Thursday, October 24, 2024
Halloween Trading Strategy Begins Next Week | Jeff Hirsch
NASDAQ: Up 25 of last 30 years, average gain 2.43%, median gain 2.29%.
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.
Jeffrey A. Hirsch (October 24, 2024) - Halloween Trading Strategy Treat Begins Next Week.
- Presidential Cycle in line with the Decennial Cycle.
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.
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.