Week Before Thanksgiving Bullish Too In addition to this week being options expiration week, this week is also the week before Thanksgiving week. This overlap occurs in most years, but not all. November 2013 would be the most recent example when they did not overlap. Nonetheless, the overall bullish bias that options expiration week exhibits also exists during the week before Thanksgiving week. Over the last 21 years, DJIA and S&P 500 have both advanced more than 70% of the time during the this week. DJIA has gained an average of 0.65% and S&P 500 0.32%. NASDAQ and Russell 2000 are slightly weaker, up just 61.9% of the time with average gains of 0.56% and 0.15% respectively. Steep losses occurred in 2008 during financial crisis and 2011 also hosted sizable losses.
Thanksgiving Trade: Day Before & Friday After Most Bullish Trading around Thanksgiving has a bullish tendency perhaps buoyed by the “holiday spirit.” First published in the 1987 Stock Trader’s Almanac, the Wednesday before and the Friday after Thanksgiving combined were up 34 times in 35 years. The only S&P 500 decline was in 1964. Subsequently, this trend changed. In the 30 years since 1987, there have been 8 declines and 22 advances. The best short-term trade appears to be getting long into weakness on Monday or Tuesday of Thanksgiving week and selling into any subsequent rally by the end of Thanksgiving week, but remain nimble as events like Greece’s debt crisis in 2011 can cancel Thanksgiving on Wall Street. Also of note is the change in the yearend rally. Prior to 1987, from the close of trading on the Friday after Thanksgiving to yearend, the S&P 500 rallied only 20 times in 35 years. As Thanksgiving bullishness lost steam in 1987, the rally afterwards occurred more frequently. Since 1987, S&P 500 has logged gains in 22 of 30 years from the close on Friday after Thanksgiving to yearend.
Things to Be Thankful For: 2017 Market Returns Nov 21, 2017 Below is an updated look at our asset class performance matrix showing total returns for ETFs so far in 2017. We also show total returns so far this month and in the fourth quarter. Aside from a few areas like the US Energy and Telecom sectors plus oil and natural gas, every other asset class on the matrix is positive on a total return basis in 2017. As we approach Thanksgiving 2017, there’s certainly a lot for investors to be thankful for this year.
4 Things to Consider About the Most Bullish Month of the Year Posted by lplresearch Historically, December has been a strong month for equities, but will that be the case this year? Here are some stats to be aware of as we head into the home stretch for 2017 (all stats are as of 1950*): December has been the strongest month of the year for the S&P 500 Index, posting gains 74.6% of the time with an average return of +1.6%. Both are the best out of the 12 months of the year. When the S&P 500 began December above its 200-day moving average (as 2017 likely could), returns have been even better as the index posted gains 76.1% of the time (35 out of 46) with an average monthly return of 2.0%. Conversely, when the index started December beneath its 200-day moving average, it finished the month higher 71.4% of the time (15 out of 21) with an average gain of 0.9%. When the S&P 500 was up more than +15% year to date heading into December (as 2017 likely could), the index has closed out the month higher 14 out of 20 times with an average return of +1.7%— again better than the average return. Incredibly, December has never been the worst month of the year. Per Ryan Detrick, Senior Market Strategist, “While we all know that December is historically a bullish month, what also stands out is that this month has never once been the worst month of the year for the S&P 500. Considering March 2017 is the current worst month of the year, as it closed down 0.04%, this could bode well for the bulls in December.”
Another 1,000 Point Dow Threshold Bites the Dust Nov 30, 2017 While all the attention shifted towards bitcoin and the pace with which it traded up through different 1,000 point price levels, the DJIA just reminded investors that it too has been on quite a run. With the index on pace to close above 24,000 for the first time today, that now makes it six 1,000 point thresholds that the DJIA has crossed for the first time since last November’s Election. The table below lists the first day that the DJIA closed above each 1,000 point threshold beginning with 1,000 way back in 1972. Obviously, the higher the index goes, the less of a percentage move each successive threshold becomes, but the recent pace has still been quick. Even more impressive is the fact that for each of the recent thresholds the DJIA has crossed, it hasn’t dipped back below very often. In fact, since last November’s election, no single 1,000 point threshold has been crossed (on a closing basis) up or down more than five times.
The Teflon Market Dec 4, 2017 Despite a seemingly endless number of events that investors could easily use as justification to take profits, US equities just keep marching higher. While the magnitude of the gain this year has been far from record-breaking for a calendar year, the consistency has been without precedent by some measures. The tables below from our most recent Bespoke Report serve as an example of how Teflon the market has seemingly become as the S&P 500 is in its second-longest bull market, the tenth longest streak without a 10% correction, the fourth longest run without a 5% decline, and the longest rally ever without even a 3% decline. At some point the market’s luck will run out, but betting on when that will be has been tough on the wallet so far. With the S&P 500 showing steady gains throughout the year, it seems a day doesn’t go by where we aren’t seeing new record highs. The chart below shows the number of all-time record closing highs for the S&P 500 on an annual basis since 1929. With 57 records (not including today) so far this year, 2017 ranks as the third most all-time closing highs for a calendar year behind 1995 (77) and 1964 (65). Unfortunately, with 19 trading days left in the year, it is now mathematically impossible for this year to overtake or even tie 1995’s 77 record highs, but 1965’s total of 65 is still within reach. Even that, though, will be tough as eight of the year’s final 19 trading days would need to be record highs to just tie for second all time. If the final few weeks of 2017 simply keep up the current pace of the first eleven months of the year, 2017 would finish with a total of 62 all-time closing highs. Still not a bad total by any stretch. How Equity Returns Stack Up Dec 5, 2017 With the S&P 500 finishing November with a gain of 3.1% on a total return basis, the index saw its 13th straight month of gains. That’s right. Since last November’s election, US equities haven’t seen a down month, which is pretty remarkable when you think about it. With such continuous strength, the S&P 500’s total return over the last 12 months has been a gain of 22.9%, which is nearly double the historical average of 11.7%! In the chart below, we have compared the S&P 500’s current one, two, five, ten, and twenty-year annualized total returns to their historical averages going back to the late 1920s. In the short to intermediate term, returns have been consistently above average with both the two and five-year annualized returns of over 15% exceeding the historical average by around five percentage points per year. Longer term, though, the impacts of the financial crisis and dot-com bust are still making their presence felt. Over the last ten years, the S&P 500’s 8.3% annualized return trails the historical average by about two percentage points, while the twenty-year annualized return of 7.2% trails the historical average of 11.1% by a pretty wide margin. The US equity market has obviously exited the dark ages of the early 2000s, but the scars, however faded they have become, are still there. Only time can heal. Taxes: Tech’s Pain is Financials and Industrials Gain Dec 6, 2017 Ever since the GOP tax reform bill moved out of the Senate Budget Committee on the 28th of November, we’ve seen some pretty big rotation out of some sectors and into others based on the market’s view over which ones have the most to gain and lose from the bill. The biggest loser by far, though, has been Technology, while Financials and Industrials have been beneficiaries. The chart below shows the relative strength of all three sectors versus the S&P 500 over the last year where a rising line indicates the sector is outperforming the S&P 500, while a falling line indicates underperformance. As shown in the chart, Technology had been a huge outperformer on the year leading up to late November, while both Financials and Industrials were lagging the market. That trend came to an abrupt halt last Tuesday, though, when the trends completely reversed. Now, before we all start crying over the performance of the Technology sector, we would note that even after the recent moves it is still outperforming every other sector this year by more than 15 percentage points, so there is a long way to go before it is actually lagging. Furthermore, the stocks that have been hit the hardest are still, for the most part, the biggest winners in 2017. The move in Financials, however, has been impactful as the sector has gone from underperforming the S&P 500 to outperforming on a YTD basis. Typical December Pattern: Any Retreat Usually a Great Entry for Yearend Rally During the most recent 21-year period, 1996 to 2016, December has been a reasonably good performing month. December is #5 for DJIA (+1.3%) and S&P 500 (+1.3%). NASDAQ ranks third best with a (+1.8%). December is the best month for small-caps with Russell 2000 averaging 2.9% in the month. Based upon the above seasonal pattern chart December typically begins well with all five indexes generally trading higher over the first five to seven trading days of the month, then weaken ahead of mid-month before recovering to finish the month higher. Weakness ahead of mid-month could be the result of tax-related selling, but holiday cheer and the prospects for the upcoming year generally reverse any first half weakness.
Watch for January Effect of Small-Cap Outperformance to Begin Anytime Small-cap stocks tend to outperform big caps in January. This is frequently referred to as the “January Effect,” the tendency is clearly revealed by the graph below. Thirty-seven-plus years of daily data for the Russell 2000 index of smaller companies are divided by the Russell 1000 index of largest companies, and then compressed into a single year to show an idealized yearly pattern. When the graph is descending, large caps are outperforming smaller companies; when the graph is rising, smaller companies are moving up faster than their larger brethren. In a typical year the smaller fry stay on the sidelines while the big boys are on the field. Then, around late November, small stocks begin to stir and in mid-December, they take off. Anticipated year-end dividends, payouts and bonuses could be a factor. Also, it is at this time of year that tax-loss selling abates and traders often pick up beaten-down, oversold small-cap shares. Other major moves are quite evident just before Labor Day—possibly because individual investors are back from vacations. The move this year ahead of Labor Day (red line) began earlier, lasted until early-October and was well above historical average. Small caps typically hold the lead through the beginning of June, though the bulk of the move is typically complete by early March. Can 2017 Go 12 for 12? Posted by lplresearch 2017 could be one of the least volatile years ever for equities, along with being a solid year for the bulls. In addition, we could also be looking at the first year in U.S. stock market history to see every month of the calendar year close higher. “The S&P 500 Index has had monthly win streaks that lasted a full 12 months, but never in history have all 12 months of a calendar year been positive on a total return basis. And with only a few weeks to go, should December finish in the green, we could be looking at yet another amazing record going down at the hands of 2017,” per Ryan Detrick, Senior Market Strategist. 1958, 1995, and 2006 were “close but no cigar” years, with each having 11 months in the green; while 1974 holds the record for futility with only one month in positive territory. The good news is that years following those with 11 higher months have never been lower, and average annual returns have been an impressive 10.8%. For more on monthly win streaks, be sure to watch this interview on CNBC with LPL Research. ‘Tis the Season to be Jolly for Owning Stocks in December Posted by lplresearch As the Holiday season approaches and yet another year comes to a close; it is comforting to know as investors, that December tends to fare well for stocks. In fact, for those who follow the seasonal statistics for the equities markets; looking back over the past 20 years, it may appear likely that stocks move higher this month. Our latest analysis identified a variety of sectors that showed a seasonal tendency to outperform the S&P 500 during December over the last 20 years—a month when the index has on average moved higher by 1.5%, generating positive returns 75% of the time. As we review the data, it’s important to note that nonseasonal factors still influence performance and should not be ignored. The table below highlights sectors’ average over- and under-performance versus the S&P 500 during December since 1997, as well as the top-performing industry groups over the same time period: Looking at the table above, the real estate and utilities sectors have on average tended to exhibit the highest relative strength versus the index in December over the past 20 years. However, if you are interested in looking under the hood for a more targeted strategy, out of the top ten industry groups, the industrials, financials and consumer discretionary sectors represent seasonally strong breadth for select industry categories in December. Enjoying friends and family is the beauty of the holiday season; let us continue to be jolly and have a cup of cheer considering that the seasonal statistics suggest equities continue higher throughout this month – and possibly it could be a good time to consider implementing seasonal analysis as part of your portfolio management plan.
What Does a 20% Gain Mean? Posted by lplresearch Yesterday, the S&P 500 Index price return surpassed 20% for the year, which could be the first 20% gain since 29.6% in 2013. What does that mean, other than the obvious answer that stocks had a great year? Per Ryan Detrick, Senior Market Strategist, “One might think the year after a 20% gain tends to be weak, as the big gains are digested. But, the year after a 20% gain actually tends to be stronger than the average year.” Since 1950 there have been 18 years that saw a 20% gain, and incredibly the next year was higher 16 times (83.3%) with an average return of 11.2%.* Compare that with the overall average year seeing the S&P 500 up 8.9% with positive returns 71.6% of the time, and it is clear that banking on weakness the year after a 20% gain may not be the best plan. So how rare is a 20% gain? Turns out they aren’t all that uncommon, as over the past 67 years (since 1950) there have been 18 years that finished up at least 20% (26.9% of the time). Considering that 19 years during the same period saw negative returns, you could argue the likelihood of a single year finishing in the red is nearly the same as a year finishing up 20%. As it turns out, big returns aren’t quite as unusual as they might seem, and history would say a 20% gain in 2017 would only add to the odds that the bull market continues in 2018.
2018 Forecast: Healthy Economy, Strong Market & New Tax Law Bullish – Dow 29,000 in the Cards We’ve been digging and searching for indications that this market is running out of steam and we are headed for some sort of major correction, sizeable pullback or a bear market next year, but we have been hard-pressed to find any such data. Sure valuations and sentiment are rather high, but we all know that situation can go on for longer than most bearish investors can stay short or on the sidelines. A growing economy with increasing corporate earnings can bring price/earnings valuations down as well as a price decline. We do expect a mild soft patch next year during the Worst Six Months (May-October) as is often the case. You might think that such a banner market rally in the usually weak post-election year would “steal” gains from the midterm gains. But that is not really the case. As you can see in the chart below the black line representing midterm years that followed positive post-election years runs extremely close to the blue line of all midterm years. There are other factors at play that have led us to believe this year is likely to be another strong one. Secular Bull Underway For one thing it is becoming apparent that our 2010 Super Boom Forecast for DJIA to reach 38,820 by the year 2025 is on track. We first released that forecast in this space in May 2010 (starts on page 10 of the June 2010 newsletter) with DJIA around 10,000. We last updated this forecast in March of this year. We now believe that the February 2016 bear market low was the end of the last secular bear and the beginning of the new secular bull market. If you refer to the Bull and Bear Market stats in your handy Stock Trader’s Almanac 2018 on pages 131-132 you will see that the average bull market gain for DJIA is 85.6%, for S&P it’s 81.5% and for NASDAQ it is 129.7%. That equates to about DJIA 29,000. S&P 500 3,300 and NASDAQ 9,800. From here that’s a 17% move for DJIA, 23% for S&P and 40% for NASDAQ. Now, you might be concerned that it’s been a long time since we have had a 10% correction and we are way overdue. It is getting close to two years since the last 10% drop (the aforementioned February 2016 bear market low) and it now stands at 679 days. We are not saying that we will not have a 10% next year; we may very well have one in the worst six months of 2018, but just because we are 164 days over the average timespan between 10% corrections in bull markets does not mean we are overdue for one. The gap from 2011 to 2015 was 1326 days for example. See the rest in our study from August. 2018 Forecast Based on everything we have analyzed, including the risks of high market valuations, rocky geopolitics, a new Federal Reserve Chair and the history midterm-election-year volatility we once again have laid out three scenarios for next year: Worst Case – 5% chance. Full blown midterm bear market caused by North Korea actually setting off a nuke, no positive impact from tax reform, or some other doomsday scenario. Base Case – 47.5% chance. Above average midterm year gains in the range of 8-15%, a mild worst six correction or pullback. Best Case – 47.5% chance. Everything pans out, tax reform juices corporate earnings, bonuses & paychecks grow, economy grows. DJIA 29,000, S&P 3,300, NASDAQ 9,800 The midterm election outcome matters less than many people think with this president. Even if the Democrats take back both houses of Congress President Trump is highly likely to veto any Democratic legislation that comes to his desk. The Dems are not likely to get two-thirds veto override majority. The current Congress and President Trump have put the country on a new path with less regulation and lower taxes. This direction will remain in place until at least January 2021; the next regularly scheduled Inauguration Day. Then there is our January Indicator Trifecta which served us quite well in 2017. While post-election years are notoriously bearish, when all three January Indicators – the Santa Claus Rally, First Five Days and the full-month January Barometer – are all positive we hit the trifecta. Post-election years since 1949 average about 6.2%. When the January Indicator Trifecta is positive post-election years average 24.0%. It is a similar case for this midterm year. Average gain since 1950 is 6.7%, but with a positive January Indicator Trifecta midterm years average 21.1% – all based on the S&P 500. So the forecast is out, but as always we reserve the right to make adjustments on the close of January 2018.
A Strong First Five Days Could Have Bulls Smiling Posted by lplresearch So far so good for the S&P 500 Index as it has just logged a 2.8% gain over the first five trading days of 2018 to mark its best five-day start to a year since 2006. Per Ryan Detrick, Senior Market Strategist, “Like a kid sledding down a hill, sometimes all it takes is a little momentum to get moving. Well, stocks appear to be similar, as when the first five days of a new year are up 2% or more, the full year has been higher 15 out of 15 times!” Not only has the full-year return for the S&P 500 been positive in every instance when the index gains at least 2% over the first five trading days of the year, but the average gain has been a very impressive 18.6%. Although we expect the bull market to continue, one key point we want to stress is not to expect another smooth ride like we saw in 2017. Last year was the first year in history that the S&P 500 went all 12 months without a 3% correction; it also had the fewest 1% daily changes since 1965 and the smallest average daily change since 1964. In short, 2017 was truly historic in terms of tranquility. But what should matter most to investors now is that years that started off with a 2% or greater return after five days have seen an average correction of 11.1% within the year. Positive Santa Claus Rally & First Five Days Boost Full-Year Prospects Even though today turned out to be a mixed day for the market (DJIA down, S&P 500 and NASDAQ up), S&P 500 is still positive year-to-date (2.8%) and thus our First Five Day (FFD) early warning system is also positive. Combined with last week’s positive Santa Claus Rally (SCR), our January Trifecta is now two for two. The January Trifecta would be satisfied with a positive reading from our January Barometer (JB) at month’s end. Even if S&P 500 was to suddenly reverse course and finish the full month in the red, the outlook for the next eleven months and the full year remain quite good. Of the last 39 years since 1950 that the SCR and FFD were both positive, the next eleven months and full year advanced 87.2% of the time with gains of 11.5% and 14.0% respectively. A positive SCR and FFD are encouraging and further clarity will be gained when the January Barometer (page 16, STA 2018) reports at month’s end. A positive January Barometer would further lift expectations for solid full-year gains.
DJIA Surpasses Average Midterm Full-Year Performance on Ninth Trading Day of 2018 As of today’s close, the tenth trading day of January, DJIA is up 4.34% year-to-date and S&P 500 is up 3.85%. Since 1902, DJIA’s average full-year performance in midterm years is 4.1%. S&P 500 is slightly stronger since 1930, gaining 4.8%. Midterm years that were also the second years of newly elected presidents averaged DJIA +1.1% and S&P 500 –0.4%. New Republican presidents were fractionally better with DJIA gaining 2.2% in newly elected Republican president second years while S&P 500 climbed just 0.3%.
S&P 500 Gained 21.1% in Midterm January Indicator Trifecta Years Midterm elections years have a tepid history since 1950, but when all three of our January indicators (Santa Claus Rally, First Five Days and full-month January Barometer) were positive the next eleven months and full-year market performance was significantly above average. Last year, was the most recent year the January Trifecta was positive and the market delivered. In past midterm years since 1950, S&P 500 has averaged a full-year gain of 6.7%, but when the January Trifecta was positive in midterm years, the average full-year gain swelled to 21.1%. Since 1950 there have been 17 midterm years of which 5 years had a positive January Trifecta, 1950, 1954, 1958, 1966 and 2006. The January Trifecta record is not perfect as 1966 was negative and the market did suffer a minor bear market (S&P 500 down 22.2% peak to trough). Vietnam and tightening money supply contributed to losses in 1966.
S&P 500 Low Volatility Could Last Until 2020 In the table below the total numbers of daily moves made by the DJIA and the S&P 500 have been compiled going to the beginning of our database. Daily percentage moves have been broken down into three separate columns based upon the size of the move and the year in which it occurred and then sorted by +1/-1 days, fewest to greatest. Next to each year, the total number of trading days in that year is also been listed. Since Saturday trading ceased in May 1952, each year since has approximately 252 trading days. Last year, 2017 stands out for being one of the least volatile years in history. DJIA registered just 10 trading days in 2017 that had moves in excess of 1% which was the third fewest since 1901. S&P 500 tied for third place with 8 trading days. For those pondering how long such a low volatility streak could last; S&P 500 recorded three consecutive years, 1963, 1964 and 1965 with 8 or less trading days with moves in excess of +1% or -1%. A similar duration streak today could last until 2020 begins. The sorting of the data also confirms that low volatility is most often associated with solid annual gains. However, at the bottom of the table high volatility is not always associated with losses as elevated volatility tends to persist after a major market bottom. A recent example would be 2009.
S&P 500 off to best start since 1987 At yesterday’s close, the fifteenth trading day of January, DJIA was up 6.03% year-to-date, S&P 500 was up 6.19% and NASDAQ was up 8.07%. This is DJIA’s best start since 1997, S&P 500 since 1987 and NASDAQ since 2001. In the following tables the Top 10 years with the strongest performance on the fifteenth trading day of January appear for DJIA, S&P 500 and NASDAQ. DJIA’s performance in 2018 ranks #10 going back to 1901. S&P 500 in 2018 ranks #5 while NASDAQ ranks #6. Each of the previous nine Top 10 January starts is further broken down to show monthly and full-year performance for the remainder of the year. With just a few exceptions, most years were solidly bullish following a strong January start.
95% of the time big Januarys precede next eleven month gains A big January is any January that gained 4% or more since 1930. There have been twenty-six big Januarys. Average S&P 500 performance in February following a big January is 1% with gains 65.4% of the time. In the modern era, since 1950 February dips to 0.8%. March has been even firmer, up 73.1% of the time with an average gain of 1.6%. The following 11-month and full-year also put up respectable numbers which really improved after 1950. S&P 500 advanced 95% of the time with a 15.2% average advance following big Januarys. Full-year performance was perfect (after recovering from 1987’s plunge) since 1950, up 100% with an average move of +22.5%.
DJIA’s December Closing Low Holds – Further Declines May Be Averted There are four key indicators in the annual Stock Trader’s Almanac that we pay close attention too, in addition to a myriad of other technical and fundamental data points. The market’s rip-roaring run through most of January gave us positive readings from the Santa Claus Rally, the First Five Days and the full-month January Barometer. Such strength in January put DJIA well above its December 6th closing low of 24140.91. Thus far this level has held on a closing basis even after DJIA declined over 2000 points which is a positive. Since 1950, DJIA has closed below its December closing low 34 times in the first quarter. In all but two occurrences (1996 & 2006), it fell further with the decline averaging 10.5% (page 38 STA18). Twenty of the years still enjoyed a gain for the remainder of the year and the full year was up 18 times. Provided December’s closing low holds, January’s positive indicator trifecta is still in play. Today’s gains have returned DJIA and S&P 500 to positive year-to-date performance and closer to historical averages for this time of a midterm year. Based upon previous midterm trading, DJIA and S&P 500 now have room to move higher, but at a much more cautious pace than the start of the year. Provided economic data and corporate earnings remain firm; inflation and bond yields steady; and the Fed does not get overly aggressive with rate increases DJIA and S&P 500 could be back near previous highs by the end of April or early May.
What Could a New Fed Chair Mean for Markets? As Janet Yellen hands over the reins to Jerome Powell at the Federal Reserve (Fed), a look back at history shows that markets have a funny way of testing new Fed chairs. We’ll get into all of that in a second, but first things first—how did Yellen do? Over her four year tenure as Fed chair, the Dow gained a solid 63%. As the chart below shows, this ranks 6th out of the previous 15 Fed chairs: Here are several other interesting stats on Fed chairs and markets: On an annualized basis, the Dow gained 12.9% under Yellen, which ranks as the 4thbest performance. The best total return under a Fed chair is the 312% Dow gain under Alan Greenspan. Greenspan was also the longest tenured Fed chair at 18.5 years, so his annualized return is only 8.0%. Greenspan became the Fed chair about two months before the stock market crash of 1987. The shortest tenured Fed chair was William Miller at 1.4 years. Arthur Burns is the only Fed chair to take office on a weekend day (Sunday, February 2, 1970). Eugene Meyer oversaw the largest decline during his less than two-year term; which occurred during the Great Depression when the Dow lost 65%, marking the worst annualized return at -32.6%. There were two consecutive Fed chairs named Eugene (Meyer and Black) during the Great Depression. What are the odds of that? “I didn’t have a computer on my first day at LPL, and I thought that was bad,” remarked Ryan Detrick, Senior Market Strategist. “Well, Jerome Powell saw the single worst first day ever for a Fed chair when the Dow dropped 4.6% on Monday—I’d say that’s a bad first day on the job!” “Weakness after a new Fed chair is quite normal. In fact, the Dow tends to slide more than 15% on average within the first six months of new Fed leadership,” said Detrick. But the good news is that the Dow has rebounded more than 20% on average a year after those six-month lows are made. There are many reasons why global markets tumbled over the past week; but it’s important to be aware that a new Fed chair (and the uncertainty he or she might bring) adds yet another worry for markets as Powell becomes acquainted with his new job, and markets become acquainted with him.
The Year of the Dog Could Have Bulls Smiling Posted by lplresearch The Chinese New Year (often called the Lunar New Year) kicks off tomorrow (February 16), and with it comes the Year of the Dog. Although we would never suggest investing based on the zodiac signs—it is important to note that the Year of the Dog has historically been quite strong for equities. Since the Chinese New Year typically starts between late January and mid-February, we looked at the 12-month return of the S&P 500 Index starting in late January dating all the way back to 1950.* And wouldn’t you know it? The Year of the Dog is up more than 15% on average. Woof indeed. “The Chinese Zodiac says that 2018 will be a year of happiness and rest; but, it also looks like it could be a good year for equity bulls, as the S&P 500 tends to do very well during the Year of the Dog. In fact, out of the 12 zodiac signs, no year sports a better average return,” according to Ryan Detrick, Senior Market Strategist. We would like to stress one more time not to invest because of the zodiac sign, but wouldn’t it be something if man’s best friend could come through with more gains within the next 12 months?
