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Friday, June 23, 2017 8:38:32 AM
:) Chill: Summer isn’t the season for a bear market
By Mark Hulbert | June 23, 2017
This is yet another reason not to sell dull stock markets short
CHAPEL HILL, N.C. — Even if a bear market were about to begin, it’s unlikely to do so this summer.
That’s because relatively few of the bear markets since 1900 have begun during the three-month stretch of June through August. In fact, if bear market beginnings were equally likely to occur at any point in the calendar, then more than twice as many bear markets of the last 120 years would have begun during these summer months.
See this chart:
That’s the surprising conclusion I reached when analyzing the calendar of bear markets back to 1900 that is maintained by Ned Davis Research. Just four of the 35 bear markets that have occurred since then began between the beginning of June and the end of August. On the assumption of randomness, we’d expect this number to be nine.
My finding is just the opposite of what many of my clients think would be the case. They instead believe that, if anything, the June-through-August period would be the three-month stretch containing the greatest number of bear market beginnings—not the least. That’s because it comes right in the middle of the six-month seasonally unfavorable period with the saying “sell In May and go away.”
Furthermore, my results may actually overstate the probability of a bear market beginning in the summer. That’s because you may be inclined not to count one of the few bear markets on the Ned Davis Research firm’s calendar that did begin in the summer: the one that began in July 1998, triggered by the Long Term Capital Management bankruptcy. Though there’s no doubt that that decline was severe (both the Dow Jones Industrial Average DJIA, -0.06% and the S&P 500 SPX, -0.05% fell by 19.3% on a closing basis), the decline lasted just six weeks, at which point the go-go years of the late 1990s resumed in earnest.
To be sure, a lot of patterns such as this one end up being nothing more than statistical noise. But there does appear to be a theoretical basis for believing it unlikely that bear markets will begin in the summer. That’s because bull market tops are typically accompanied by well-above-average high trading volume, and the summer months are ones in which volume usually below average.
Those of you who are looking for an imminent stock market top therefore might want to focus your sights on September. Volume tends to pick up markedly that month, and—sure enough—an above-average number of bear markets begin then. In fact, more bear markets have begun in September than in any other month, according to the Ned Davis Research calendar.
http://www.marketwatch.com/story/chill-summer-isnt-the-season-for-a-bear-market-2017-06-23
• DiscoverGold
*** For Market Direction and Trends visit our board:
https://investorshub.advfn.com/Market-Direction-and-Trends-26249/
By Mark Hulbert | June 23, 2017
This is yet another reason not to sell dull stock markets short
CHAPEL HILL, N.C. — Even if a bear market were about to begin, it’s unlikely to do so this summer.
That’s because relatively few of the bear markets since 1900 have begun during the three-month stretch of June through August. In fact, if bear market beginnings were equally likely to occur at any point in the calendar, then more than twice as many bear markets of the last 120 years would have begun during these summer months.
See this chart:
That’s the surprising conclusion I reached when analyzing the calendar of bear markets back to 1900 that is maintained by Ned Davis Research. Just four of the 35 bear markets that have occurred since then began between the beginning of June and the end of August. On the assumption of randomness, we’d expect this number to be nine.
My finding is just the opposite of what many of my clients think would be the case. They instead believe that, if anything, the June-through-August period would be the three-month stretch containing the greatest number of bear market beginnings—not the least. That’s because it comes right in the middle of the six-month seasonally unfavorable period with the saying “sell In May and go away.”
Furthermore, my results may actually overstate the probability of a bear market beginning in the summer. That’s because you may be inclined not to count one of the few bear markets on the Ned Davis Research firm’s calendar that did begin in the summer: the one that began in July 1998, triggered by the Long Term Capital Management bankruptcy. Though there’s no doubt that that decline was severe (both the Dow Jones Industrial Average DJIA, -0.06% and the S&P 500 SPX, -0.05% fell by 19.3% on a closing basis), the decline lasted just six weeks, at which point the go-go years of the late 1990s resumed in earnest.
To be sure, a lot of patterns such as this one end up being nothing more than statistical noise. But there does appear to be a theoretical basis for believing it unlikely that bear markets will begin in the summer. That’s because bull market tops are typically accompanied by well-above-average high trading volume, and the summer months are ones in which volume usually below average.
Those of you who are looking for an imminent stock market top therefore might want to focus your sights on September. Volume tends to pick up markedly that month, and—sure enough—an above-average number of bear markets begin then. In fact, more bear markets have begun in September than in any other month, according to the Ned Davis Research calendar.
http://www.marketwatch.com/story/chill-summer-isnt-the-season-for-a-bear-market-2017-06-23
• DiscoverGold
*** For Market Direction and Trends visit our board:
https://investorshub.advfn.com/Market-Direction-and-Trends-26249/
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
• DiscoverGold
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