November Almanac, Vital Stats & Strategy Calendar: Best Months Begin By: Jeffrey A. Hirsch & Christopher Mistal | October 26, 2017 | Email | Print

November begins the “Best Six Months” for the DJIA and S&P 500, and the “Best Eight Months” for NASDAQ. Small caps come into favor during November, but don’t really take off until the last two weeks of the year. November is the number-three DJIA and number-two S&P 500 month since 1950. Since 1971, November ranks second for NASDAQ. November is number-one for Russell 1000 and Russell 2000 second best since 1979.

 

November maintains its status among the top performing months as fourth-quarter cash inflows from institutions drive November to lead the best consecutive three-month span November-January. The month has taken hits during bear markets and November 2000, down –22.9% (undecided election and a nascent bear), was NASDAQ’s second worst month on record—only October 1987 was worse.

 

In post-election years, November’s market prowess is relatively unchanged. DJIA has advanced in 13 of the last 16 post-election years since 1953 with an average gain of 1.8%. DJIA has been up 10-straight post-election year Novembers. S&P 500 has been up in 12 of the past 16 post-election years. Small caps perform well with Russell 2000 climbing in 7 of the past 9 post-election years, averaging 2.8%. The only real blemishes in the November post-election year record are 1969 (DJIA –5.1%) and 1973 (DJIA –14.0%, OPEC oil embargo).

 

 

 

Options expiration often coincides with the week before Thanksgiving and does so this year. DJIA posted ten straight gains 1993-2002 and has been up 19 of the last 24. The Monday of expiration week has been streaky, but the net result since 1994 is 19 DJIA gains in 24 years. Options expiration day has a clearly bullish bias, up 12 of the last 15. The week after expiration has been improving lately, up four of the last five after being down five of six from 2006 to 2011.

 

Being a bullish month November has six bullish days, though it does have weak points. NASDAQ and Russell 2000 exhibit the greatest strength at the beginning and end of November. Russell 2000 is notably bearish on the 12th trading day of the month, when the small-cap benchmark has risen just six times in the last 33 years (since 1984). The Russell 2000’s average decline is 0.47% on the day. Recent weakness around Thanksgiving has shifted DJIA and S&P 500 strength to mirror that of NASDAQ and Russell 2000 with the majority of bullish days at the beginning and end of the month. The best way to trade Thanksgiving is to go long into weakness the week before the holiday and exit into strength just before or after.