The best trading week of the year starts now
Long-term investors can sleep through the following, but tactical investors and traders may want to turn around. That’s because we’re at the start of the best trading week of the year for stocks – at least, historically speaking.
Everyone knows that October and November are two of the market’s favorite months. But they also happen to contain short bursts of absolutely excellent returns, says Ryan Detrick, chief financial markets strategist at LPL.
October 28 was the longtime champion of one-day performance – that is, until he faced over 3% in 2020. As a result, he relinquished his reign in as King of the Hill Day Trade through October 27.
But don’t feel too bad for October 28th. It’s always a big day for stocks, says Detrick, just like October 29, November 2, and November 3.
“I would like to think it has something to do with my birthday being October 28, but the truth is bulls need to be aware that the days ahead are historically some of the best of the year,” he said. said Detrick.
Fall is a good time for stocks
Indeed, the strategist says the best day to buy at the close and hold for the next five trading days is today, October 27.
âYes, those five days were 0.6% lower last year, but you have to go back to the late 1960s to see the last time they fell two years in a row,â adds Detrick.
Which brings us to November. Since 1950 – and over the past 10 years – this has been the most important month for market returns.
âNovember is the best month of the year, but it doesn’t seem to be getting as much love as you might think,â Detrick said. “We all assume December is the best month, but November is actually better and gets very little fanfare. Maybe it should be a month for bulls, not turkeys.”
As good as November has been for investors since 1950, it’s actually not a big deal when we dive much deeper into the past. Since 1928, the average price change in November has only been + 0.9%, according to Yardeni Research. This ranks it only as the fifth best month for the S&P 500.
December – so beloved by investors – did a better job, but it is still only the third best month in the market since 1928. The last month of the year shows an average price change of + 1.3%.
If we talk about really long investment horizons – in this case over the last 93 years – the most important month in the market is July, hands down. This may be because the heatwave days have not yet set in, but everyone’s favorite summer has seen an average price change of + 1.6% since 1928.
It’s unclear why July has historically been so good for the market. Maybe he just likes to troll those who sell in May.