Welcome To Q4
Chris Kimble | Oct 01, 2015 11:53AM ET
Welcome to the fourth quarter of 2015! Good friend Ryan Detrick put together this nice piece for us and I wanted to share it on the first day of the new quarter. It hasn’t been a good year for the bulls, but is that about to change? The good news is that this is historically the best quarter of the year.
The past 20 years it has been even better. Also, notice the third quarter has a negative average return. In other words, is the weakness this quarter really a surprise?
Breaking things down by the four-year Presidential cycle shows the upcoming quarter is up about three percent on average.
What about if September is lower? That happened in 2015 and again there is a nice bounce the rest of the year.
Even more rare is both August and September lower. This time we see extremely strong returns. In fact, the previous three times this happened were 2011, 2001, and 1999. The fourth quarter in those years returned a stellar 11%, 10%, and 14%.
Get The News You Want
We saw a big drop in the third quarter this year (down about 9% with one day to go), what does that mean? Well, there have been 15 drops of more than 5% in the third quarter and the fourth quarter bounces back more than 6% on average.
Things get even better during the third year of the Presidential cycle when the third quarter is down big. Up 11% on average would make a lot of people smile the last three months of the year.
If the S&P 500 is down year-to-date after three quarters, the fourth quarter is up three percent on average with a six percent median return.
The bottom line is we are entering a historically bullish time frame, but do you just simply buy on the first day of the month? I’d say no. Looking at what the average October looks like, we tend to see a major low late in the month – then a very strong rally.
Looking at what the average October looks like, we tend to see a major low late in the month – then a very strong rally.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.