Stock Trader’s Almanac issues seasonal buy signal

The historical trend is about to turn bullish for stocks. The Stock Trader’s Almanac issued a seasonal buy signal for equities, saying investors who sold in May can start to come back to the market now as the calendar nears what are historically the best six months of the year. The six-month period between November and April boasts a stellar track record for equities while, typically, the months from May through October are more lackluster. Take a look at what has happened with the Dow Jones Industrial Average . Since 1950, the November to April period accounted for the bulk of the benchmark’s advance, cumulatively adding 26,250 points, while the average during the comparatively weaker months of May through October gained just 7,634 points, according to the Almanac. The same is true of the S & P 500 . In the best six months, the S & P 500 gained 3,019 points, while rising 1,133 points in the worst six. On top of seasonal trends, a look at a technical trading gauge called the “moving average convergence divergence” indicator can help investors figure out when to start increasing their exposure to equities, the Almanac added. “Starting on the first trading day of October we look to catch the market’s first hint of an uptrend after the summer doldrums,” the Almanac wrote in a bulletin to subscribers. “And beginning on the first trading day of April we prepare to exit these seasonal positions as soon as the market falters.” .SPX YTD mountain S & P 500 There have been some years across history when the November to April period has registered double-digit losses for investors, such as the period starting in 2019, right before the Covid-19 pandemic hit; in 2008 during the financial crisis; in 1973 during the OPEC oil embargo; and in 1970 with the invasion of Cambodia. As it is, the May to October period of this year has been surprisingly strong. After a pullback in early August, the Dow Jones Industrial Average and S & P 500 have recouped all of their losses and are currently starting the week trading at all-time highs, sparking fears among some that stocks are overbought. The 30-stock Dow Jones Industrial Average rose above the 43,000 milestone on Monday, while the S & P 500 recently crossed the 5,800 level for the first time.