Stock Market Seasonality - Part 2
· October has a bad reputation because many corrections and bear markets ended in October.
· Since 1945, a pullback of 5% or more has ended in October 33 times, more than any other month. March and September are next, at 23 each.
· Since 1950, 6 of 12 bear markets bottomed in October.
· But oftentimes corrections end in September or in early October, and the market performance in October is not that bad on average.
· Since 1950, the S&P 500 has gained about 0.8% to 1% in a typical October, and finished higher a bit more than half the time.
· Notably, in midterm years, October is the best of the calendar. Per Stock Trader’s Almanac, the gains are about +3.0% for the S&P and +3.2% for the Dow. November is close behind, about +2.7%, and up more often.
· There is also a difference in October’s performance in bull and bear markets, as the chart below shows.
· Last but not least, November-April is the favorable period for stock market returns.
