Post by FD1000 on Mar 2, 2024 14:48:26 GMT
TRADING PLACES WITH TOM BOWLEY
Evaluating Risk is a Key Difference Between Successful and Unsuccessful Traders
(stockcharts.com/articles/tradingplaces/2024/02/evaluating-risk-is-a-key-diffe-502.html)
The first half of calendar quarters 1-3 is historically MUCH more bullish than the second half of calendar quarters 1-3. During the current secular bull market that began in 2013, here's the S&P 500 breakdown by annualized returns by calendar quarters 1-3:
1st half of calendar quarters 1-3: +18.14%
2nd half of calendar quarters 1-3: -3.37%
I deliberately ignored Q4, because this quarter has a long history of seeing considerable strength during both halves. But in quarters 1-3, we should simply recognize the historical patterns and be sure to lower our expectations, especially after such a significant rally since late-October 2023.
Utilities don't outperform technology very often, but it seems to happen somewhat frequently in the 3rd months of calendar quarters. Check out March, June, September, and December above. March is the best calendar month for XLU outperformance vs. the XLK. But the second months, February, May, August, and November, favor technology in a HUGE way!
Now let's look at consumer staples (XLP, defensive) vs. consumer discretionary (XLY, aggressive), using the same seasonality chart since 2013: Again, it's the third months of calendar quarters where defensive areas show some relative strength and the second months where we've seen MASSIVE relative weakness. We need to recognize these seasonal patterns to become better traders, knowing when it's appropriate to take on more risk.....and when it's not.
Based on all of this, it seems rather prudent to me to be a bit more cautious now.
Evaluating Risk is a Key Difference Between Successful and Unsuccessful Traders
(stockcharts.com/articles/tradingplaces/2024/02/evaluating-risk-is-a-key-diffe-502.html)
The first half of calendar quarters 1-3 is historically MUCH more bullish than the second half of calendar quarters 1-3. During the current secular bull market that began in 2013, here's the S&P 500 breakdown by annualized returns by calendar quarters 1-3:
1st half of calendar quarters 1-3: +18.14%
2nd half of calendar quarters 1-3: -3.37%
I deliberately ignored Q4, because this quarter has a long history of seeing considerable strength during both halves. But in quarters 1-3, we should simply recognize the historical patterns and be sure to lower our expectations, especially after such a significant rally since late-October 2023.
Utilities don't outperform technology very often, but it seems to happen somewhat frequently in the 3rd months of calendar quarters. Check out March, June, September, and December above. March is the best calendar month for XLU outperformance vs. the XLK. But the second months, February, May, August, and November, favor technology in a HUGE way!
Now let's look at consumer staples (XLP, defensive) vs. consumer discretionary (XLY, aggressive), using the same seasonality chart since 2013: Again, it's the third months of calendar quarters where defensive areas show some relative strength and the second months where we've seen MASSIVE relative weakness. We need to recognize these seasonal patterns to become better traders, knowing when it's appropriate to take on more risk.....and when it's not.
Based on all of this, it seems rather prudent to me to be a bit more cautious now.