bear markets

Weekly Update

The Cyclical Nature of Markets

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Published September 1, 2023

 

This week, we offer an educational article from Schwab on market cycles. We hope you will find it helpful in understanding why markets behave as they do.

“Market cycles, as the term suggests, happen again and again over time, and they cover a wide range of types: bear markets and bull markets, sell-offs and rallies, and expansions, recessions, and recoveries. These cycles come in different shapes, sizes, and durations, and no two are exactly alike.

By understanding the various definitions of market cycles, learning how to identify them, and seeing how they’ve played out over time, investors can potentially gain valuable insight for portfolio strategy. (more…)

Weekly Update

The January Trifecta Indicator

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Published January 27, 2023

 

Back in January 2013, the Stock Traders Almanac created the “January Indicator Trifecta” by combining three indicators that occur over a five week period: 1) the Santa Claus Rally indicator, 2) the First Five Days Early Warning System and 3) the full-month January Barometer reading.

When all three of the “January Indicator Trifecta” readings are up the S&P 500 has closed the year with a gain 90% of the time, 28 of 31 years, with an average gain of 17.5%.

When any of the three are down the year’s results are reduced.

When all three are down, the S&P is down almost half the time (down 3 of 8 years with an average loss of -3.6%). (more…)

Weekly Update

Up and Down – The Waves of a Bear Market

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Published September 23, 2022

 

There are thousands of ways to invest. We prefer to remove the emotional component and use mechanical models to drive our investing. Some others like to rely on seasonal cycle analysis. One of those cycles is the four-year presidential election cycle shown below. The second year of the presidential cycle tends to be the worst of the four years. The return historically has been flat through the first nine months of the second year. This year, we are well below that flat historical trend. But the presidential election cycle suggests we are nearing the best performance of the four years. The period from the midterm election to the following May tends to offer outstanding performance. That would be a substantial change in market tone from where we are in today’s market where caution and negative sentiment rule. (more…)