Stocks Are Entering Their Historically Strongest Stretch — But There May Be a Catch This Year | …

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Stocks Are Entering Their Historically Strongest Stretch — But There May Be a Catch This Year

Most investors know the last two months of the year tend to be bullish ones. Yardeni Research, in fact, says the S&P 500 (SNPINDEX: ^GSPC) averages a gain of 1% in November, followed by nearly a 1.3% gain in December. Over the course of the past century, the index has also logged gains in about two out of three of these two-month stretches.

What most investors may not be aware of is that the next six months are typically bullish as a whole too. The S&P 500 averages a net gain of more than 5% between November and April, culminating in a gain of almost 1.4% in the final month of that six-month stretch. In other words, if you're playing the historical odds, you want to make a point of getting in — and staying in — the stock market here.

History Says the Stock Market's Best 6 Months Start Nov. 1. Here's How Often They've Paid Off Since 1950.

"Sell in May and go away" is one of Wall Street's best-known sayings. It holds that the best time to own stocks runs from November through April, a pattern Jeff Hirsch and his father, Yale, popularized in the Stock Trader's Almanac.

This year, Nov. 1 lands on a Sunday. So the first trading day of the stretch is Monday, Nov. 2, and it's measured from the close on Friday, Oct. 30. The S&P 500 (^GSPC +0.61%) goes into it after closing Monday at 7,676.77, around 1.8% under its Oct. 6 record close of 7,818.93.

I wanted to check how well the saying has held up. I looked at the index's daily closes since 1950 and measured every stretch from the last close of October to the last close of April, on price alone, without dividends. The S&P 500 climbed in 58 of those 76 stretches, with an average gain of around 7%.

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