For anyone still concerned on cycle lows,
I'd suggest a look at a 1994 historical chart on the SPX. If market catalysts become negative and hit the market in the next two months, we could get a seasonal pattern that could look more like that year. However, again, with so many people now aware of the 4-yr pattern, who is going to sell the market down into that huge pool of waiting buyers? I'd say odds of the market going back to retest summer lows are very low - it's not going to happen.
I mention 1994, because that cycle low (also a low percentage down move) turned out to be the initiation point of the great tech run from 1995 through '98 - a huge run. The market low that year was actually in April, with a retest in June and then the cycle low and start of the bull run was actually in the second week of December of 1994.
As I've mentioned before on Yahoo Goog board (sorry lost some posts from a corrupted cookie file from them), the unknown still is how many badly damaged funds are out there, and if any more have to liquidate this month/end of the year, does it trigger a selloff in some sectors? Again, I would say the odds are low, especially at this point now (I'll post more on this soon), but will have to wait and see.
If you're still concerned, I'd say focus instead on the gains of the 4-yr cycle (remember also 1998 to 2000). And, focus on the leading stocks and potential leaders right now.
I'm staying long (at 90%+, with 4% short on a homebuilder and ex-DOW component which I will probably cover next week on any weakness) and watching the market. And will trim and focus my total number of current positions down further depending on price/vol action to about 5 or 6 issues.
Below is a recap of some more historical info on the 4-yr cycle from Sam Stoval at S&P, FYI:
There are sixteen quarters in a full four-year presidential cycle, historically, only two have declined on average in the past (I find that amazing too) — the second and third quarter of the second year of the term. And, the best-performing quarter of all 16 quarters (in a presidential cycle) is the fourth quarter of the second year - the one we start tomorrow. The second best quarter is the first quarter of the third year.
Good luck.
AI
