The Calendar Is in Investors' Favor
Although the year after a presidential election is generally the weakest for stocks, other even more predictive indicators are flashing positive, writes MoneyShow's Howard R. Gold, also of The Independent Agenda.
As both the Dow Jones Industrial Average and the S&P 500 hover near all-time highs, and other key indices have surpassed their peaks, individual investors have jumped into US stocks again for the first time in years.
Those events have prompted some pundits to get more cautious. But one long-time tracker of market trends has a word of advice: Relax.
Jeffrey Hirsch is editor in chief of the Stock Trader’s Almanac, founded by his father Yale. The Almanac specializes in seasonal trading patterns, which Hirsch tracks over decades.
The two most important trends, he says, are the annual six-months-on, six-months-off pattern and the four-year presidential cycle. The six-month pattern recommends buying stocks around Halloween and selling in May. The presidential election cycle identifies the likely best (the third year after an election) and worst (the post-election year) years for equity performance.
This year, Hirsch expects a strong annual seasonal pattern to trump the historically weak post-election year and give the S&P 500 a positive return in 2013.
- Read Howard’s 2013 predictions about the market and the economy at MoneyShow.com.
That’s a change from the more cautious stance he took when he put together the 2013 Almanac in the middle of last year. “I’m not as bearish as I was.