S&P 500 Seasonality – This is Not an Ordinary Year

In terms of seasonality, the S&P 500 is having a ‘bad’ year.

Why bad? Because the S&P has not been following its seasonal path outlined by many decades of historic price action.

Below is a look at the actual 2015 S&P 500 price action (blue line) and S&P 500 seasonality (gray line).

This hand-crafted S&P 500 pre-election year seasonality chart is based on daily closing prices of every pre-election year since 1951 (full seasonality chart for S&P 500 and other asset classes available to Profit Radar Report subscribers).

The general path of pre-election and overall seasonality is very similar (overall S&P 500 seasonality is based on closing prices of every year since 1950).

 

Due to the smaller data set, and a more bullish bias, pre-election year seasonality features stronger rallies, but also deeper pullbacks.

The May rally (green arrow) is one of those moves that’s more pronounced during pre-election years.

Based on seasonality, the S&P 500 (NYSEArca: SPY) is ‘supposed to’ move higher into early May.

Seasonality is one of the four major market-moving forces I use to compose my market forecasts. Technical analysis, supply & demand data, and investor sentiment are the other key forces.

Detailed forecasts based on those four indicators are available to Profit Radar Report subscribers.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

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S&P 500 Seasonality About to Hit Weak Pocket

Seasonality is not the only force to drive stocks, but it’s one of the indicators I follow. The S&P 500 seasonality chart (for pre-election years) shows four notable weak spots (seasonality is based on 64 years of daily closing prices).

One of them, although not very intimidating, is the second half of February (others are in May, July and October – a full year seasonality chart is available via the Profit Radar Report).

The chart below highlights the February weak spot.

Purely based on seasonality, the S&P 500 (NYSEArca: SPY) is unlikely to follow through on its bullish technical break out, at least not in February.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

What the Seasonality Chart Predicts for Apple (AAPL)

Many forces affect the market and individual stocks. Seasonality is one of them. In fact, AAPL seasonality shows a distinct drop in September, which is when AAPL started its 45% decline. Here’s the full seasonality chart.

In September 2012, Apple (NasdaqGS: AAPL) accounted for 20% of the Nasdaq-100 and 5% of the S&P 500 (NYSEArca: SPY).

AAPL was the single most influential stock in the financial universe, the MVP of the Nasdaq and S&P 500.

It was back then when I decided to put together an Apple seasonality chart for Profit Radar Report subscribers. Apple seasonality is based on daily price action going back to 1998, which is the year Steve Jobs came back to U-turn Apple from near bankruptcy to profitability.

Since 1998, AAPL has gone from $1 to $100, so the seasonal bias is distinctively bullish in most months. The biggest exception is September.

AAPL seasonality was one of the reasons why the Profit Radar Report turned bearish on Apple and issued this, at the time shocking recommendation, on September 12, 2012:

“Aggressive investors may short Apple (or buy puts or sell calls) above 700 or with a close below 660.”

AAPL seasonality shows some weakness in mid-July, but projects higher prices from early August to mid-September.

The interesting thing about AAPL seasonality is that it doesn’t really match up with S&P 500 seasonality. The 2012/2013 AAPL bear market has shown that the S&P 500 (SNP: ^GSPC) doesn’t have to move in the same direction as AAPL.

Although AAPL is only 5% away from its all-time high, AAPL lost its dominance. Today AAPL makes up ‘only’ 13.24% of the Nasdaq-100 and only 3.22% of the S&P 500.

That’s because other stocks like Google, Microsoft and Amazon have rallied, while AAPL is trying to recover from its bear market.

Obviously, seasonality is only one factor that affects stocks. Here are five other things to consider about Apple:

3 Reasons Why Apple is a Buy – and 2 Reasons Why Not

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Waiting on What the 100% Accurate Barometer Forecasts for 2014

What’s up for 2014? Nobody knows, but there are some indicators and early barometers that provide a sneak peek for the year ahead. One of them has been spot on 17 out of 17 times.

Wall Street is starting to read the tea leaves as financial outlets brew their 2014 forecasts.

As we know from past ‘brews,’ it’s tough to come up with an elixir that actually ends up being spot on.

Here’s something better than tea leaves:

The months of December and January are rich with barometers for the year ahead.

There’s the Santa Claus Rally (SCR), First 5 Days of January (F5J), and the January Barometer (JB).

The table below shows the performance of each indicator/barometer (based on S&P 500) since 1970 along with the full year performance of the S&P 500.

On a stand-alone basis, the January Barometer (as January goes so goes the year) is the most accurate of the three barometers with an accuracy ratio of 76.7%. Click here to read about the one Santa Claus Rally tall tale that fools all of Wall Street.

2012/13 saw a positive SCR, F5J, and JB. Since 1950 that’s only happened 16 times.

When that’s the case, the Profit Radar Report forecast for 2013 stated that: “The S&P 500 finished with full-year gains each of the 16 times.”

Baring a 25% drop before the end of the year, this three-prong indicator will lock in a 17 for 17 record, maintaining its 100% accuracy ratio.

Post-election years (such as 2013) are the weakest of the 4-year presidential election year cycle. The average gain of a post-election year is only 3.8% for the S&P 500 (see chart below).

However, the January 15, 2013 Profit Radar Report update pointed out that: “Post-election year performance under democratic presidents is much more bullish than post-election and overall seasonality.”

The seasonality chart below (featured in the January 15 Profit Radar Report update) shows the difference between post-election year seasonality with democratic presidents and ‘regular’ annual seasonalities.

We use the S&P 500 for our calculations, because it includes 500 stocks instead of the 30 stocks covered by the Dow Jones. An analysis based on the Dow Jones will yield very similar results.

The Profit Radar Report’s 2014 forecast is made up of various different components, which include technicals, sentiment, seasonal patterns, cycles, and fundamental trends.

What will 2014 bring for the S&P 500 (NYSEArca: SPY) and Dow Jones (NYSEArca: DIA)?

We are waiting for the 2014 barometer results and will include them in our 2014 forecast formula as soon as they become available.

In the meanwhile we may be looking to buy based on this 100% accurate (based on 2013 track record) indicator.

The Incredible VIX Market Bottom Indicator

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (stocks, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. We are accountable for our work, because we track every recommendation (see track record below).

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.