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I do know we’re within the midst of a robust rally that started EXACTLY when seasonality urged it could – on the shut on October twenty seventh. I mentioned the very bearish seasonality main as much as that October twenty seventh shut in my article, “Odds Favor Additional Promoting This Week (Possibly a LOT of it)”. Test it out if you have not already. On the finish of this text, I identified that bullish historic tendencies would quickly overpower the bears and we have seen historical past repeat itself as soon as once more because the bulls have dominated the bears in the course of the latter a part of October and all through November.

Technical Value Motion

Earlier than I present extra bullish historic tendencies forward, let’s take a look at the S&P 500 over a number of time frames:

S&P 500 – 1 12 months Every day:

Fairly easy. We had a correction. The downtrend was damaged. We’re now trending increased with approaching worth resistance close to 4600. To the draw back, a niche help zone resides from 4411-4559 and the rising 20-day EMA is conveniently situated in the course of it at 4437.

S&P 500 – 5 Years Weekly:

Positive appears to be like like a bullish inverse head & shoulders continuation sample to me. The sample is nearly completely symmetrical and it follows a really clear uptrend. The sweetness right here is that the sample measurement is from the 4600 neckline all the way down to the inverse head slightly below 3500. That is 1100 factors. A breakout above 4600 would measure up 1100 factors to 5700. Good luck bears! Throughout uptrends, the RSI tends to carry the 40-50 vary. Be aware the October low was squarely on 40. Now the RSI is again above 60. That is how the RSI unfolds throughout bull market advances. I additionally love the PPO reset on the zero line. We’re now transferring straight up off of that check, and that is indicative of accelerating bullish momentum.

S&P 500 – 40 Years Month-to-month:

Do you see something aside from an uptrend? The red-shaded areas spotlight what we sometimes see throughout secular (long-term) bear markets. From 2000 to 2013, we noticed ZERO significant breakouts. It wasn’t till April tenth, 2013 that the secular bull market started, making a definitive breakout above the 1550-1575 space. Since then, we have seen cyclical bear markets and corrections, however nothing extra. But permabears attempt to name each downturn the start of the subsequent collapse. And so they’re all the time unsuitable. We’ll have scary occasions once more, however it ain’t now – at the very least not for my part. The 2030s might be a a lot completely different story, however I see the present pattern increased persevering with for a variety of years. Be aware that our month-to-month PPO sometimes stays above zero and our month-to-month RSI stays above 40 all through secular bull markets. Promoting does not final lengthy sufficient to take these indicators beneath the required zero and 40 ranges, respectively. However we’ve got to cope with the “sky is falling!” media and permabears all through. In the event you want a “default”, default as a bull. You may be proper way more usually.

Historic Tendencies

We stay within the strongest and most bullish time of the calendar yr, which I outline as October twenty seventh shut by January 18th shut. That is primarily based on my 73 years of analysis on the S&P 500, relationship again to 1950. We nonetheless have some not-so-bullish intervals throughout November, December, and January, however the overwhelming bias is to the upside. As an example, the November twenty first by December sixth interval yields an annualized return of +32.97% over the previous 7 a long time, almost quadrupling the common annual S&P 500 return of +9.00%. Do not misunderstand me. This does not assure us increased costs for the subsequent couple weeks. As a substitute, it is merely offering us a seasonal tendency for inventory costs to maneuver increased. I take advantage of seasonality as a secondary indicator, very like PPO and RSI. The first indicator is all the time worth motion.

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Comfortable buying and selling!

Tom