The worst six months are even worse during bad (so far) years

Those next 6 months could be a challenge based on the calendar. We've all heard about 'sell in May and go away' and it has been particularly acute during down years. When the S&P 500 was down at least 5% year-to-date through April, the months ahead were skewed more toward risk and less toward reward. 

It has been particularly dastardly over the past 60 years. The next 2-6 months were not pleasant. 

Worst six months during down years

Contrast that to the returns during the 42 years when the S&P was up at least 5% through April. 

Worst six months during up years

When the S&P was down 5% or more heading into the summer, the next 6 months averaged -1.4% with a 47% win rate, compared to an average of +3.6% and 74% win rate during up years.

Seasonality is a tertiary input at best, but it suggests that upside over the summer months might be hard to come by given the already-weak conditions.

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We also looked at:

  • With a surge in buying interest, stocks enjoyed a "double" Zweig Breadth Thrust
  • Market returns after plunges in GDP
  • Personal spending also plunged, and what that meant for stocks

The post titled The worst six months are even worse during bad (so far) years was originally published as on on 2020-05-01.

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