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#Halloween Trade
jeffhirsch · 2 years
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Setting the Record Straight: Best Six Months, Halloween Indicator, Sell in May
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It’s that time of year again. The Best Six Months November-April begin next week, and they are even better when they begin in midterm years. But there are the naysayers so here’s the proof. This bar chart from the about to be released 2023 Stock Trader’s Almanac is led to Yale Hirsch’s discovery of this pattern and strategy.
Our Best Six Months Switching Strategy (aka “Halloween Indicator” or “Sell in May”) works. Any research to the contrary that goes back to 1900 on the DJIA (or even further back), is way too far back. Sell in May is an old British saw, soundly based on inherent behavioral finance patterns and the collective cultural behavior of the investment community, but it did not truly become a tradable investment strategy until after WWII.
The issue with starting way back then is the world is a much different place now than 100-plus years ago. Prior to about 1950, farming was a major portion of the U.S. economy and from 1901-1950, August was the best performing month of the year, up 36 times in 49 years (market closed in August 1914 due to World War I) with an average gain of 2.3%. July was the second-best month, up 31 of 50 with an average gain of 1.5%. June was fourth best, averaging 0.9%. Why, you may ask? Simply: planting, sowing, reaping, and harvesting. As crops were planted and then brought to market and sold, cash began to move and so did the stock market.
Agriculture’s share of GDP began to shrink post World War II as industrialization created a growing middle class that moved to the suburbs where hard-earned salaries would be spent filling new homes with all the modern conveniences we all take for granted now. Farming became more efficient and fewer and fewer people worked on the farm.
Suddenly, summer was less about the hard work of harvesting crops and more about vacations and relaxing. As the economy evolved and peoples’ lives changed, the market evolved. June and August went from being top performing months to bottom performing months. August went from #1 to #10 in 1950-2021 with an average DJIA gain of 0.1%. June went from #4 to #9 (0.1% average). The shift in DJIA’s seasonal pattern is clear in the following chart. “Sell in May” is a post WWII pattern, prior to then it would have been “Buy in May”.
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While many market participants are hip to the saying “Sell in May and go away,” most forget to get back into the market in the fall. We like to say, “Buy in October and get yourself sober.” Before folks were keen on the Halloween Indicator which calls for getting long stocks on Halloween and the end of October, we created our Best Six Months Switching Strategy in 1986 and first featured it in the 1987 Stock Trader’s Almanac.
Back in 1986 we showed how most of the market’s gains were made in the “Best Six Months (BSM)” from November to April and that the market went sideways in the “Worst Six Months (WSM)” from May to October and is most susceptible to major declines during the Worst Six Months. From April 1950 to October, 21 2022 the S&P 500 has gained 2721.33 points versus 1013.35 points in the WSM. These six months combined have produced an average DJIA gain of 7.3% since 1950 compared to an average gain of just 0.8% during the months May to October.
We have improved the results of the strategy using the MACD technical indicator. Back in 1999 the late Sy Harding enhanced the BSM strategy by employing the late Gerry Appel’s MACD to improve entries and exits and dubbed it, “the best mechanical system ever.” Over the years we have refined the strategy further by corroborating more than one MACD, looking for confirmation across major market indices and taking MACD triggers earlier in the month.
We issued our Best Six Months Seasonal MACD Buy Signal to members on October 4 and have also issued baskets of seasonal sector ETF and undervalued, under-the-radar stock trades.
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testoster0ne · 8 months
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chase
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dailyfigures · 8 months
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Hello Kitty ; Sanrio Characters ☆ Kidrobot
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millipede-menace · 7 months
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They’re trading candy~
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thecaywild · 7 months
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May I give you some treats…
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lupucs · 8 months
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My part of an art trade with the amazing Sphinxmothra, featuring their vampire gals 🦇 Here's Sphinxmothra's part, check em out!
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card-of-the-day · 7 months
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Today's Card Is: Hallowe'en
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wenalena · 7 months
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Happy Halloween 🎃 !
It's a wonderfull art trade with the adorable and talented @cloned-eyes 🖤🖤
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monstermelodies · 2 years
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Universal Monsters trick-or-treat trading cards (Impel 1991)
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trainerjoshie · 7 months
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🎃👻 Spooky Pokémon TCG Promotional Art illustrations by AKIRA EGAWA 😍❤️
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Photo
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Distant Thunder (1993)  by  Bernie Wrightson
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Happy Halloween!
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idyllhaze · 7 months
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Baskerville Qiao
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dailyfigures · 7 months
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Pumpkaboo & Mimikyu & Gengar & Unown & Misdreavus & Teddiursa ; Pokemon ☆ Re-Ment
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chocolatechipkraken · 7 months
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Shoutout to those sweet eyeball rubber ducks that Oriental Trading used to sell. I wanted one but I never bought any, and alas they are now discontinued :(
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brokehorrorfan · 10 months
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Spirit Halloween has released a life-size Mars Attacks martian warrior animatronic for $400. Standing 6.5' tall, it lights up, makes sounds, moves its head, and shoots mist from its gun.
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