Remember November
10/30/18

●November has been the stock market’s strongest month over the past 50 years

●Average SPX gain of 2.45% over past 25 years


 

After an October that has lived up to its reputation for volatility but not for bullishness, traders may be leery of hearing about the stock market’s historical tendencies during November.

But with numbers like November’s, it’s a good idea at least keep that history in mind, just in case.

S&P 500 (SPX) November returns, 1968-2017. 34 of 50 up Novembers

Source: OptionsHouse (data)

No doubt about it, over the past half century November has been, on average, the US stock market’s most bullish month of the year. The chart above shows that from 1968 through last year, the S&P 500 (SPX) gained ground in 34 of 50 Novembers (68% of the time), a win rate that trails only April and December. And November’s 2.3% median gain tops all months of the year.

Since 1993, November has been even better: Up in 18 of 25 years (72% win rate), with a median return of 2.45%. The current streak of six consecutive up Novembers is one shy of the record seven in a row from 1977-1983. (A good sign or a bad sign, depending on your perspective.)

The four largest SPX November losses of the past 50 years all took place during some exceptionally bad market episodes: 1973 (the heart of the 1970s bear market), 1987 (market crash), 2000 (dot-com collapse), and 2007-2008 (housing market implosion and financial crisis).

Also, the month has more often than not started with a bang, with 64% of the first trading days of November from 1968 through 2017 closing higher (average gain of 0.3%). And day-1 bullishness has tended to lead to upside momentum for the first five trading days of the month.

S&P 500 (SPX) median November daily returns, 1968-2017. November daily profile.

Source: OptionsHouse (data)

The chart above, which shows the median daily return for each trading day of November from 1993-2017, shows the two biggest bursts of positive returns tended to be in the first several days of the month, and again toward the end of the month.1

And for the record, of the 20 negative Octobers since 1968, 13 (65%) were followed by positive Novembers. After the 30 positive Octobers, 21 (70%) were followed by positive Novembers.

Current dynamics typically dictate the market’s path in any given year, but that doesn’t change the fact that if you were going to pick a month to bet against, it probably shouldn’t be November.

 

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1 Supporting document available upon request.