Showing posts with label Scott Rubner. Show all posts
Showing posts with label Scott Rubner. Show all posts

Friday, December 6, 2024

Presidential Cycle Effects with a New President | Tom McClellan

The Presidential Cycle Pattern suggests that the stock market tends to follow similar patterns during the same points in prior presidential terms. The Presidential Cycle Pattern is calculated by averaging the S&P 500 performance over 4-year chunks. Variations can include factors like whether the president is a first-term or incumbent. 
 
  1st Term Presidential Cycle Pattern November 2024 - January 2026

The chart above compares the stock market performance under new presidents versus incumbents. The green line represents new presidents, while incumbent presidents tend to have a more stable market, especially in the first year of their second term, due to a stronger economy heading into reelection. New presidents often spend their first two years facing crises inherited from their predecessors, which can dampen investor sentiment. Incumbents, by contrast, don’t typically blame the previous administration and tend to have better market conditions in their second term.

There’s also a difference in stock market behavior after an election. When a new party wins, Wall Street initially celebrates, but the enthusiasm often fades when the new president faces the reality of governing, particularly in dealing with Congress. In 2020, the market behaved differently due to massive Fed intervention, with QE4 pumping $1 trillion per month. However, this was reversed in 2022 with quantitative tightening.

  1st Term Presidential Cycle Pattern November 2024 - November 2028

By the third year of a presidential term, stock market trends tend to be positive, with few exceptions like 1931 and 1939. By the election year, early performance differences between first and second term presidents are generally evened out. 
 
Looking ahead to Trump’s presidency, the market may initially react positively to expectations of tax cuts, deregulation, and government efficiency. However, if his policies lead to a balanced budget, historically, that could be bearish for the stock market.
 

Wednesday, November 27, 2024

20-Year High in Insider Selling Precedes Market Top | Adam Taggart

Insider selling is often early.

The highest bars in the chart above (ratio of sellers to buyers) seem to come before the final major price tops in the S&P 500. The ratio of insider selling to buying is now at a 20+ year high:
 
1. Stocks are at an all-time high.
2. Corporate executives are selling far more stock than they are buying.
3. It doesn't take a genius to see that the insiders are cashing out while the getting is good,
     leaving everyone else to be the patsy when the rug pull arrives.


 
Over the past 50 years, the Nasdaq has only experienced one instance (2011) where it was negative both on the Wednesday before and the Friday after Thanksgiving. Out of the 9 negative Wednesdays recorded during this period, the Nasdaq posted a positive return on 8 Fridays after Thanksgiving, with an average Friday gain of 1.39% and a median gain of 0.83%.
 

Thursday, November 21, 2024

Thanksgiving to Santa Claus Rally Trade │ Jeff Hirsch

Thanksgiving [Thursday, November 28] kicks off a run of solid bullish seasonal patterns. November-January is the year’s best consecutive 3-month span (2025 STA p. 149). Then there’s the January Effect (2025 STA p. 112 & 114) of small caps outperforming large caps in January, which begins in mid-December.

 » Buy the Tuesday before Thanksgiving and hold until the 2nd trading day of the New Year. «

And of course, the "Santa Claus Rally," (2025 STA p. 118) invented and named by Yale Hirsch in 1972 in the Almanac. Often confused with any Q4 rally, it is defined as the short, sweet rally that covers the last 5 trading days of the year and the first two trading days of the New Year. Yale also coined the phrase: "If Santa Claus should fail to call, bears may come to Broad and Wall."

We have combined these seasonal occurrences into a single trade: Buy the Tuesday before Thanksgiving and hold until the 2nd trading day of the New Year. Since 1950, S&P 500 has been up 79.73% of the time from the Tuesday before Thanksgiving to the 2nd trading day of the year with an average gain of 2.58%. Russell 2000 is up 77.78% of the time since 1979, average gain 3.34%.

 
 » From November 5 to December 31, the average return of the S&P 500 has been 2.68%; Nasdaq 100 5.53%, 
and Russell 2000 5.7%. In election years S&P 500 3.38%; Nasdaq 100 0.79%, and Russell 2000 7.94%. «
 

Thursday, October 24, 2024

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.

 
 Election-Year Octoberphobia — Jeff Hirsch, October 9, 2024
 
 November Performance in “All Years” (1930-2015) and “Election Years” (1932-2012) 

 
October 28th has, on average since 1950, been the strongest day of the year.
 
 
 
S&P 500 Seasonal Pattern for Q4 of the Election Year 2024
- Presidential Cycle in line with the Decennial Cycle.
 
 S&P 500 E-mini Futures (daily bars) and current 21-Trading Day Cycle ( ± 3 TD).
 
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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.