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Here is another great guest post written by Wayne Whaley, CTA:
The S&P 500 was up 5.74% in November and is up 21.30% through the first 11 months of 2009.
Since 1950, the average month is up 0.67%. December is the best month of the year on average, up 76% (44 positive to 15 negative) of the time for an average gain of 1.64%. On a median return basis, December is second (1.49%) to November (1.83%).
If the first 11 months of the year are up 10% or more, the odds improve modestly, with December up 75.9% (22-7) of the time for an average return of 2.07%.
However, patience is in order as most of the gains come on the last five trading days, 46-13 (78.0%) for an average five day return of 0.97%. And I saved the best for last.
If the market is up more than 10% going into the last 5 trading days of the year, those five days are 27-2 (93.1%) for an average gain of 1.22%.
Markets and seasonal patterns rarely repeat themselves, but have a tendency to rhyme in some shape or form. When market move fails to meet historical parallels, it is often a signal that a change in direction is imminent. More on that later, if it develops.
If you have an interesting idea on the market and would like to write a guest post, drop me a line.
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