The S&P 500 has now logged a nearly vertical climb of 11.6% in just 17 sessions. The stochastics have entered overbought territory, currently scraping the top of the range (not unusual when the underlying index keeps setting new highs).
In both distance and duration this recent up-move is above-average for the S&P 500.
There is no guarantee the S&P 500 will pull back at this point, but the big traders are likely getting concerned with keeping their profits. At some point, they will start exiting (see the similar period in September in the above chart).
On the other side of the coin, the track record of the S&P 500 over the next 6 months is one of nearly steady rises in both average gains and number of years with gains:
Rob Hanna of Quantifiable Edges has published an analysis that focuses not only on the SPX's strong seasonal pattern for this time of year, but narrows it down to the 3rd year of the Presidential Cycle:
In short, don't be surprised by a sudden pullback from profit taking. But over the next 6 months, the odds support good gains on the major market indexes.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2014 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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