“Best Six Months” Just Ahead

Posted by on Sunday, Oct 8, 2017 in Updates & Commentary | 0 comments

“Best Six Months” Just Ahead

The Models: The KP Trend Model is solidly GREEN with the Intermediate-Term component picking up momentum as it accelerated to its highest levels for the year this past week. Tactical exposure remains at Plus 1.

Comments: The powerful positive action, both in price and internal data continues to confound.

Yale Hirsch, creator of the venerable Stock Trader’s Almanac, formulated several notable market indicators, including “The Best Six Months of the Year” strategy. They discovered through historical research that the period from November 1 to April 30 garnered the best returns for stock investors and that the period from May 1 to October 31 have been the “Worst Six Months” to invest, a time to literally “Go Away”. During an extended period of 64 years through 2013, they found that all the gains in the market were made during November through April, compared to a loss May through October.

What’s currently happening in the markets is significant in that as we close in on the end of the “Worst Six Months”, the Dow and Nasdaq are up almost 9% since May 1. Equally noteworthy, since the recent August lows, the Russell 2000 Index (RUT), a more speculative, small-cap index, has gained 11%. And, we’re now looking ahead to the beginning of the “Best Six Months of the Year” November 1st.

All the short-term oscillator studies are overbought (and potentially due to pull back), the intermediate-term component of the Trend Model is accelerating its ascent, and the internal data we process continues to be robust. With the recent strength in the small caps, and financials, the stubborn underlying momentum is suggesting “something may be different” as we look ahead.

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