• Up Each Of The First Four Months. Time To Sell Stocks?

    by  • May 1, 2013 10:56 am • Broad Market Analysis, Quick Hits • 0 Comments

    This is the energizer rally, it just keeps defying bears month after month.  I noted yesterday, why being up six straight months is actually rather bullish.  Today I’ll take a look at what it means when the first four months of a calendar year are each positive.

    That’s the big question, is strength at the start of a year a good sign of bad sign?

    Over the past 30 years, the SPX has been up each of the first four months just five prior times before this year.  The good news for the bulls is the SPX was up at the end of the year every time, up 24% on average.  For reference, the SPX was up about 12% after four months this year.  More impressive is the final eight months were also positive every single time, up 12.5%.

    Here are all the instances.

    So that is 30 years, let’s take a longer-term look at things.  The Dow was also up each of the first four months this year and we have Dow data going back to 1900.  Looking at that, we see this phenomena has only happened 12 times since 1900.  Once again, the full year was higher every single time, up 20% on average.  Remember, the Dow was up 13% this year after four months.  The final eight months of the year have averaged 7% on average and been positive 75% of the time (9 of the 12).

    Here are all the times this has happened since 1900.  Take note, we’ve seen this happen the past two years, but each time the final eight months were actually lower.  Not by a lot, but still lower.

    Are we up a lot?  Yes.  Are there a lot of concerns?  Yes.  Is the economy on very shaking footing here?  Yes.  Still, a good deal of the bigger picture historical data would suggest this rally could still have legs.  Remember, the economy and the stock market usually don’t move together.  Be open to anything and this could include much higher prices before this year is over.




    Ryan Detrick is the Senior Technical Strategist at Schaeffer's Investment Research in Cincinnati, Ohio. He joined Schaeffer’s in 2003 and is a frequent speaker and writer on stock market and economic issues and is widely sought after by financial media for his expertise and commentary. Mr. Detrick is a common guest on CNBC, Fox Business, and Bloomberg Television and has been quoted in outlets such as The Wall Street Journal, BusinessWeek, USA Today, Reuters, the Associated Press, and others. With a decade of financial industry experience in the investment and financial services area, strengths include short-term trading with an eye toward timely technical- and sentiment-based trading opportunities, and advanced option trading strategies. Mr. Detrick received a BA in finance from Xavier University, an MBA in finance from Miami University, and has earned his Chartered Market Technician (CMT).


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