Overtime

Seasonality

Good morning,

This week I’m telling you everything you need to know about seasonality for February and the election year. One thing we’ve been keenly focused on in these pages is the Presidential Election cycle because it has been eerily accurate since the beginning of President Biden’s term.

I’ll provide an update there and cover:

• The January Trifecta

• What sectors to own and avoid in February

• Seasonal paths

• and more!

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The January Trifecta

Santa doesn’t come

Stocks fell hard in the back half of the 7-day period known as “The Santa Claus Rally”. The old saying is “If Santa Claus should fail to call, bears may come to Broad and Wall.” The average calendar year return following a failed Santa Claus Rally is just 5%, so there is some credence to the saying.

First 5 days negative

h/t @AlmanacTrader

The First 5 Days Indicator is another notable signal from Yale and Jeff Hirsch of The Stock Trader’s Almanac. While it overlaps with the Santa Claus Rally, when both are negative (the S&P 500 lost 0.1% in this year’s first 5 days) the average full-year return is just 2.8%, though the market was higher 72% of those years, right around historical averages.

The January Barometer delivers some good news

1 out of 3 ain’t bad. The S&P 500 rebounded from its rough start to 2024 and gained 4.55% in January. Years with a positive January have returned more than 11% on average over the remaining 11 months vs. just 1.93% for negative January years.