4 Reasons 'Time' Could Be On The Market's Side
Last week, Marketfy Maven Ron Insana discussed one of Wall Street's most infamous traders and the state of the S&P 500 (INDEXSP:.INX) moving forward.
The markets, he wrote, are "entering a cycle which, historically, has favored owning stocks."
Insana gave four reasons why "time" could be on the market's side.
1. Monthly Bias
"The period from October through late April," he said, "has a clear upward bias until it is time to 'Sell in May and Go Away.'"
According to Yardeni Research, three of the next five months (December, January and April) are the index's top-returning periods since 1928.
2. The Presidential Cycle
"The third year of a presidential cycle is the strongest year for stock market performance, during that four-year span," Insana explained.
Mark Hulbert explored this phenomenon recently as well, noting that since the Dow Jones Industrial Average's (INDEXDJX:.DJI) creation, "third years" have pushed the index to an average annual increase of 15 percent. Over that same time frame, the Dow rose an annual average of just over 4 percent in the rest of the presidential cycle.
3. The Executive Branch
Insana also discussed the executive branch.
"Since the early 1900s," he wrote, "stocks have performed best when the White House was controlled by a Democrat and Congress by the Republicans."
The Wall Street Journal recently reported this scenario coincided with S&P 500 annual returns of 10.1 percent since the mid-1940s. The aggregate market average return was 1.3 percentage points lower over that time, it wrote.
4. The Technical Picture
Lastly, Insana also mentioned the technicals, writing: "The technical divergences that recently suggested the market was tired, and due for a pullback, resolved themselves in favor of the bulls, when the market bottomed [last month]."
Michael Ashbaugh and Gene Marcial are just a couple chart-watchers to support this notion of late. In Ashbaugh's opinion (writing on MarketWatch), the U.S. market could be exhibiting a "strong bull trend with room to run."
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