Seasonality Briefing

For the last two weeks, we have talked extensively about seasonality in the market. It is of utmost importance for a trader to understand that April historically was the best performing month on the S&P 500 while May is one of the worst.

 

Below is a chart of the aggregated performance of the S&P 500 during our current bull trend (2009-2016). While the current May performance in 2017 is slightly above the aggregate, the pattern looks surprisingly similar.

 

Seasonality Briefing

 

If we continue to model the chart above, seasonally speaking we have a few bearish weeks ahead of us. While it would be foolish to trade exclusively off from a seasonal perspective, this does add a little context for the technical analysis we are about to review.

 

To be clear as we move forward…

 

A SEASONAL CHANGE IN MOMENTUM SHOULD NOT BE MISUNDERSTOOD TO BE A CHANGE IN THE PRIMARY TREND.

 

Trading a seasonally bear market during a well-defined bullish trend is tricky. It requires a little extra vigilance in our analysis and risk management. For now, let’s complete our analysis and then we will discuss strategy.

 

From the most simplistic perspective, the S&P 500 is clearly at a pivot point. Resistance, to be specific. While in an uptrend, this should never become a primary reason for adopting a bearish outlook. However, it might also give some context to the potential for some upcoming bearish weeks. [Access Your Complete Market Briefing Now]

 

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