Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Imminent Seasonal Lows at Historic Times

Stock-Markets / US Stock Markets Oct 12, 2008 - 06:44 AM GMT

By: Mike_Burk

Stock-Markets The good news is: We are living through great theatre. On October 20, 1987 there were 1174 new lows on the NYSE, about 57% of the 2076 issues that traded that day, a percentage record that held until recently. Last Friday there were 2901 new lows on the NYSE, about 88% of the 3306 issues traded. New lows have been calculated with their present methodology since January 1, 1978. At the 1987 low the S&P 500 (SPX) was 33.2% off its all time high set about 6 weeks earlier. On Friday the SPX was 42.5% off its all time high set about 1 year earlier.


Technical, as with most other forms of analysis looks for similar patterns in the past from which we make assumptions about the present. Records are being set daily, there are not many similar patterns in our market history.

I read a report that someone from Standard and Poors said we had the worst period (1 week, I think) for the SPX since December 1931. From December 5, 1931 to December 14, 1931 the SPX lost 14.1%, putting it 73% below its high of September 1929. It then bounced around until March 1932 when it was about 15% above the December lows before falling 51% to its final low on June 1, 1932. A total decline of 83%. In the past 8 trading days the SPX has fallen 22.8%, about the same as the crash of 1987.

The chart below covers the period from September 1931 to July 1932 showing the SPX in red. Dashed vertical lines have been drawn on the 1st trading day of each month.

How bad is it?

In the past couple weeks Warren Buffet has given 5 Billion each to Goldman Sachs and General Electric for 10% + incentives. That makes credit card rates look pretty good.

Seasonality

Next week includes the 5 trading days prior to the 3rd Friday of October during the 4th year of the Presidential Cycle.

The tables show the daily return on a percentage basis for the 5 trading days prior to the 3rd Friday of October during the 4th year of the Presidential Cycle. OTC data covers the period from 1963 - 2007 and SPX data from 1953 - 2007. Prior to 1953 the market traded 6 days a week so that data has been ignored. There are summaries for both the 4th year of the Presidential Cycle and all years combined.

Returns for the week have been modestly positive by all measures and a little stronger during the 4th year of the Presidential Cycle.

Report for the week before the 3rd Friday of October.
The number following the year is the position in the presidential cycle.
Daily returns from Monday through 3rd Friday.

OTC Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1964-4 0.00% 0.09% -0.07% -0.27% 0.11% -0.14%
1968-4 0.04% 0.35% 0.00% 0.27% -0.01% 0.65%
1972-4 -1.04% 0.44% 0.49% -0.11% 0.86% 0.65%
1976-4 -0.40% -0.29% 0.61% -0.64% 0.37% -0.35%
1980-4 0.55% 0.08% 0.21% -0.74% -0.36% -0.27%
1984-4 0.63% -0.16% -0.07% 1.08% 0.57% 2.05%
Avg -0.04% 0.08% 0.31% -0.03% 0.29% 0.54%
1988-4 0.11% 0.32% -0.13% 0.74% -0.01% 1.04%
1992-4 0.58% 0.45% -0.04% 0.42% 0.69% 2.10%
1996-4 0.65% 0.14% -0.56% -0.72% 0.04% -0.46%
2000-4 -0.80% -2.32% -1.32% 7.79% 1.89% 5.24%
2004-4 0.46% -0.19% -0.24% -0.91% 0.45% -0.44%
Avg 0.20% -0.32% -0.46% 1.46% 0.61% 1.50%
OTC Presidential Year 4 1964 - 2004
Avg 0.08% -0.10% -0.11% 0.63% 0.42% 0.92%
Win% 70% 64% 30% 45% 73% 55%
OTC all years 1963 - 2007
Avg 0.19% -0.01% -0.11% 0.41% -0.18% 0.29%
Win% 61% 51% 48% 67% 56% 51%
SPX Presidential Year 4
Year Mon Tue Wed Thur Fri Totals
1956-4 -0.30% -0.51% -0.77% 0.17% -0.22% -1.63%
1960-4 -0.42% -0.51% -0.18% -0.72% -1.00% -2.84%
1964-4 0.02% -0.33% -0.20% -0.64% 0.69% -0.45%
1968-4 0.14% 0.20% 0.00% 0.46% 0.78% 1.58%
1972-4 -1.07% 0.68% 0.64% -0.13% 1.10% 1.23%
1976-4 -0.90% -0.82% 1.30% -1.21% -0.03% -1.66%
1980-4 1.34% -0.01% 1.27% -1.11% -0.53% 0.96%
1984-4 0.97% -0.60% -0.39% 2.41% -0.08% 2.31%
Avg 0.10% -0.11% 0.71% 0.09% 0.25% 0.89%
1988-4 0.33% 1.07% -0.86% 2.13% 0.28% 2.95%
1992-4 1.19% 0.46% 0.02% 0.06% 0.52% 2.24%
1996-4 0.41% -0.14% 0.26% 0.37% 0.54% 1.44%
2000-4 0.03% -1.79% -0.58% 3.47% 0.59% 1.72%
2004-4 0.20% -0.23% -0.73% -0.93% 0.45% -1.24%
Avg 0.43% -0.13% -0.38% 1.02% 0.47% 1.42%
SPX summary for Presidential Year 4 1956 - 2004
Avg 0.15% -0.19% -0.02% 0.33% 0.24% 0.51%
Win% 69% 31% 42% 54% 62% 62%
SPX summary for all years 1953 - 2007
Avg 0.27% -0.04% -0.17% 0.19% -0.20% 0.05%
Win% 63% 36% 46% 58% 48% 56%

In case you missed it or forgot, I am including the chart showing the mean daily performance during the 4th year of the Presidential Cycle of the SPX for the month of October since 1928. On average the SPX has had a pretty rough go through the 1st 7 trading days before rallying through the end of the month. Last Friday was the 8th trading day of the month.

Money supply (M2)

The chart below was provided by Gordon Harms. More good news. M2 has increased more sharply than at any time I can recall, if there was anything normal about these times that would spark a significant rally in stocks.

Conclusion

Many indicators are at historic extremes, the Fed and Treasury are getting creative and seasonally the low for the month and quarter is usually right about now.

I expect the major indices to be higher on Friday October 17 than they were on Friday October 10.

Last weeks positive forecast was a miss.

By Mike Burk
To subscribe to this report : http://alphaim.net/signup.html

Gordon Harms produces a Power Point for our local timing group. You can get a copy of that at: http://www.stockmarket-ta.com/ .

Disclaimer: Mike Burk is an employee and principal of Alpha Investment Management (Alpha) a registered investment advisor. Charts and figures presented herein are believed to be reliable but we cannot attest to their accuracy. Recent (last 10-15 yrs.) data has been supplied by CSI (csidata.com), FastTrack (fasttrack.net), Quotes Plus (qp2.com) and the Wall Street Journal (wsj.com). Historical data is from Barron's and ISI price books. The views expressed are provided for information purposes only and should not be construed in any way as investment advice. Furthermore, the opinions expressed may change without notice.

Mike Burk Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in