November Almanac: A Top Month in Most Years By: Jeffrey A. Hirsch & Christopher Mistal | October 24, 2019 | 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-two DJIA (since 1950), NASDAQ (since 1971) and Russell 2000 (since 1979) month. November is best for S&P 500 (since 1950) and Russell 1000’s (since 1979).

 

In pre-election years, November’s performance is noticeably weaker. DJIA has advanced in nine of the last 17 pre-election years since 1950 with an average gain of 0.3%. S&P 500 has been up in 10 of the past 17 pre-election years, also gaining on average a rather paltry 0.3%. Small-caps and techs perform better with Russell 2000 climbing in 6 of the past 10 pre-election years, averaging 1.2%. NASDAQ has been up in 7 of the last 12 pre-election year Novembers with an average 0.9% gain. Contributing to pre-election year November’s weaker performance are nasty declines in 1987, 1991 and 2007

 

 

 

Options expiration often coincides with the week before Thanksgiving. 2019 is an infrequent exception as November begins on Friday this year. DJIA posted ten straight gains 1993-2002 and has been up 19 of the last 26 weeks before Thanksgiving. The Monday of expiration week has been streaky, but the net result since 1994 is 15 DJIA gains in 25 years with 10 advances occurring in the last 15 years. Options expiration day has a clearly bullish bias, up 13 of the last 17. The week after expiration has been a mixed bag recently. DJIA has been up five of the last seven after being down five of six from 2006 to 2011.

 

Being a bullish month November has five 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, the small-cap benchmark has risen just eight times in the last 35 years (since 1984). The Russell 2000’s average decline is 0.40% 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.