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February Almanac: Generally a Tepid Month for Large Caps
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By:
Jeffrey A. Hirsch & Christopher Mistal
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January 24, 2019
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Even though February is right in the middle of the Best Six Months, its long-term track record, since 1950, is not all that stellar. February ranks no better than seventh and has posted paltry average gains except for the Russell 2000. Small cap stocks, benefiting from “January Effect” carry over; tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.1% in February since 1979—just the seventh best month for that benchmark.
In pre-election years, February’s performance generally improves with average returns all positive. NASDAQ performs best, gaining an average 2.8% in pre-election-year Februarys since 1971. Russell 2000 is second best, averaging gains of 2.5% since 1979. DJIA, S&P 500 and Russell 1000, the large-cap indices, tend to lag with average advances of around 1.0%.
The first trading day is bullish for DJIA, S&P 500 and NASDAQ. Average gains on the first day over the last 21-year period are right around 0.5%. Strength then tends to fade after that until the stronger eighth, ninth and eleventh trading days. Expiration week had a spotty longer-term record but has been improving recently. The week after also had a clear negative bias that appears to be fading even though averages losses remain across the board for the past 29 years.
Presidents’ Day is the lone holiday that exhibits weakness the day before and after (Stock Trader’s Almanac 2019, page 88). The Friday before this mid-winter three-day break can be treacherous and average declines persist for three trading days after the holiday going back to 1980.
| February (1950-2018) |
| |
DJI |
SP500 |
NASDAQ |
Russell
1K |
Russell 2K |
| Rank |
|
8 |
|
9 |
|
7 |
|
9 |
|
7 |
| #
Up |
|
41 |
|
38 |
|
26 |
|
24 |
|
23 |
| #
Down |
|
28 |
|
31 |
|
22 |
|
16 |
|
17 |
| Average
% |
|
0.2 |
|
0.04 |
|
0.7 |
|
0.3 |
|
1.1 |
| 4-Year Presidential Election Cycle Performance
by % |
| Post-Election |
|
-1.1 |
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-1.5 |
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-3.3 |
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-1.3 |
|
-1.6 |
| Mid-Term |
|
0.7 |
|
0.5 |
|
0.7 |
|
0.8 |
|
1.4 |
| Pre-Election |
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1.2 |
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1.1 |
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2.8 |
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1.5 |
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2.5 |
| Election |
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-0.1 |
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0.1 |
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2.5 |
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0.3 |
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2.2 |
| Best & Worst February by % |
| Best |
1986 |
8.8 |
1986 |
7.1 |
2000 |
19.2 |
1986 |
7.2 |
2000 |
16.4 |
| Worst |
2009 |
-11.7 |
2009 |
-11.0 |
2001 |
-22.4 |
2009 |
-10.7 |
2009 |
-12.3 |
| February Weeks by % |
| Best |
2/1/08 |
4.4 |
2/6/09 |
5.2 |
2/4/00 |
9.2 |
2/6/09 |
5.3 |
2/1/91 |
6.6 |
| Worst |
2/20/09 |
-6.2 |
2/20/09 |
-6.9 |
2/9/01 |
-7.1 |
2/20/09 |
-6.9 |
2/20/09 |
-8.3 |
| February Days by % |
| Best |
2/24/09 |
3.3 |
2/24/09 |
4.0 |
2/11/99 |
4.2 |
2/24/09 |
4.1 |
2/24/09 |
4.5 |
| Worst |
2/10/09 |
-4.6 |
2/10/09 |
-4.9 |
2/16/01 |
-5.0 |
2/10/09 |
-4.8 |
2/10/09 |
-4.7 |
| First Trading Day of Expiration Week: 1990-2018 |
| #Up-#Down |
|
19-10 |
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22-7 |
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18-11 |
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22-7 |
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20-9 |
| Streak |
|
U4 |
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U5 |
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U5 |
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U5 |
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U5 |
| Avg
% |
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0.3 |
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0.3 |
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0.2 |
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0.3 |
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0.2 |
| Options Expiration Day: 1990-2018 |
| #Up-#Down |
|
15-14 |
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13-16 |
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11-18 |
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13-16 |
|
14-15 |
| Streak |
|
U2 |
|
U2 |
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D1 |
|
U2 |
|
U5 |
| Avg
% |
|
-0.1 |
|
-0.2 |
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-0.3 |
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-0.2 |
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-0.1 |
| Options Expiration Week: 1990-2018 |
| #Up-#Down |
|
18-11 |
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17-12 |
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17-12 |
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16-17 |
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20-9 |
| Streak |
|
U4 |
|
U4 |
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U5 |
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U9 |
|
U9 |
| Avg
% |
|
0.5 |
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0.3 |
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0.3 |
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0.3 |
|
0.5 |
| Week After Options Expiration: 1990-2018 |
| #Up-#Down |
|
13-16 |
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14-15 |
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17-12 |
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14-15 |
|
15-14 |
| Streak |
|
U3 |
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U3 |
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U5 |
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U3 |
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U1 |
| Avg
% |
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-0.4 |
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-0.3 |
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-0.3 |
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-0.2 |
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-0.1 |
| February 2019 Bullish Days: Data 1998-2018 |
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1,
13, 15 |
1,
12, 13, 15 |
1,
13, 14, 15, 26 |
1,
12, 13, 15, 26 |
1, 6, 12-14, 19 |
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26, 27 |
| February 2019 Bearish Days: Data 1998-2018 |
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4,
28 |
28 |
5,
28 |
28 |
5, 28 |
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