Bull market could rise further in November: Stock Trader’s Almanac

The surprising strength of stocks in light of Big Tech’s disappointing earnings could be the start of another bull market, according to the Stock Trader’s Almanac. History shows that October has seen several market bottoms, while November typically marks the start of one of the stronger seasonal periods for stocks. “The jury is still out on whether October killed another bear market. But with the Dow rising 11.5% so far in October 2022, it is on track to record its best-ever performance in October, which dating back to 1901. While many analysts, engineers and experts continue their deliberations, we tend to have entered a new bull market — at least for the short term,” the Stock Trader’s Almanac said in a note Thursday night. November marks the start of several seasonally strong periods, including the best three months in a row for the market. According to the almanac, the S&P 500 and the Dow Jones Industrial Average have averaged gains of at least 0.9% in each of the next three months since 1950. The Dow, S&P 500 and Nasdaq Composite have all fallen in bearish markets this year, defined as 20% or more below their recent highs. One factor contributing to the bear market was the Federal Reserve’s rate hikes, but some Wall Street professionals expect the central bank to slow or even pause those rate hikes in the coming months. The political cycle could also boost equities, with midterm elections in less than two weeks. November is the best month of the year for the Nasdaq over the medium term, according to the almanac, and it is also a strong period for the Dow and S&P 500. “Mid-November is also the first month of the best period of six consecutive months and the sweet spot of the four-year cycle,” the note said. The technical setup is also encouraging for the markets. The three main averages have hit 52-week lows in recent weeks, which could prove to be a bottom. Major indices have recovered from their recent lows and appear to be looking forward to the end of the Fed’s rate tightening cycle. DJIA has recovered the 50-day moving average. S&P 500 and NASDAQ have not. [Moving averaged convergence/divergence] indicators remain bullish. Further gains will be needed to really confirm another bull market,” the note said.

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