The momentum is strong as 2017 is nearing to an end. Stock market technical specialists are pleased about the seasonal stock setups for the fall season. This is important as market behavior is more or less predictable with the seasons. The generally accepted view is that May to October is the weakest season and the months from November to April are the strongest. The coming of Christmas generally heralds a positive market streak of a few percent.
According to technical analysts, the trend in the market is already robust. Nothing can stop it now. Kensho, the analytics firm, said that S&P 500, during the last 20 years, has gone up an average of 1.4 percent during November about 75 percent of the time. December saw a gain of 1.4 percent. This is also observed 75 percent of the time. Todd Sohn of Strategas said that there is little chance of the market gain turning into a market down. The last two months of any year are generally an excellent time for the stock market.
Technical analysts believe the market will move up more in November and also in December. According to Sohn, since the S&P500 has gained 15 percent in 2017, there will be an additional rise and subsequent benefit for the investors. Other market analysts agree. Ari Wald of Oppenheimer holds identical views. He said that the markets at the end of the year will also be extremely strong. He opined that seasonals will provide due support, especially when the market is clearly trending higher. The S&P 500 closed in October at 2,575. The 200-day is 2,423. The technical strategist said that the internal breadth is broad and the credit indicators betray no signs of stress.
All positive signs
Technical analysts are cautious. They are prying for all the warning signs. One of the warning signs is 30-year highs in the number of bulls compared to bears. Sohn said that they are closely observing a few parameters, saying the survey data is extremely aggressive. He assured investors that the market does not appear vulnerable as of now. This judgment can be valid anywhere between three more months to six months in the future. Yet another warning sign- flattening yield curve- is also not seen by technical analysts.