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Seasonality Eyes Inflection Point

Published 04/17/2014, 02:01 PM

We’re more than halfway through April and the S&P 500 still hasn’t really gone anywhere this year.  The index is only up 1% ytd, which has been frustrating for both bulls and bears.  Market forces have balanced against each other perfectly, resulting in a stalemate.

One relevant force will be shifting soon though.

Advantage Bulls

For the first four months of the year, the bulls have had seasonality working in their favor.  Stocks have a tendency to rise between January and April; March and April are usually particularly strong months.  Starting in May though, seasonality starts to turn in the bears’ favor.   The summer months have not historically been a strong period for share prices.  This coincides with a real lull in economic activity.

Seasonality isn’t the end all be all, but it does have some impact.  Stocks have struggled in a seasonally strong period and things aren’t exactly going to get easier from here.

Seasonality And The S&P 500

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