November Almanac: First Month of the “Best Months” By: Jeffrey A. Hirsch & Christopher Mistal | October 19, 2023 | Email | Print

It is not too late to meet Jeff, live and in-person at the MoneyShow/TradersEXPO Orlando October 29-31 and the 2023 New Orleans Investment Conference November 1-4. Octoberphobia has struck again, but October has historically been a good month to buy. Our Tactical Seasonal MACD Buy signal has triggered. Join Jeff to discuss current events and the market’s moves.

 

 

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. However, 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.

 

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 and NASDAQ (since 1971) month. November is best for S&P 500 (since 1950), Russell 1000 (since 1979), and Russell 2000 (since 1979). Average performance in all year ranges from 1.7% from DJIA and S&P 500 to a solid 2.3% by Russell 2000.

 

In pre-election years, November’s performance is noticeably weaker. DJIA has advanced in 10 of the last 18 pre-election years since 1950 with an average gain of 0.5%. S&P 500 has been up in 11 of the past 18 pre-election years, also gaining on average a rather paltry 0.5%. Small-caps and techs perform better with Russell 2000 climbing in 7 of the past 11 pre-election years, averaging 1.4%. NASDAQ has been up in 8 of the last 13 pre-election year Novembers with an average 1.2% gain. Contributing to pre-election year November’s weaker performance are sizable declines in 1987, 1991 and 2007.

 

 

 

Options expiration often coincides with the week before Thanksgiving. DJIA posted ten straight gains 1993-2002 and has been up 19 of the last 30 weeks before Thanksgiving but has been down the last six. The Monday of expiration week has been streaky, but the net result since 1994 is 17 DJIA gains in 29 years with 12 advances occurring in the last 19 years. Options expiration day has a bullish bias, up 15 of the last 21, but four of the declines have come in the last seven years. The week after expiration has been a mixed bag recently. DJIA has been up six of the last ten after being down five of six from 2006 to 2011.

 

 

Being a bullish month, November has seven bullish days based upon S&P 500, with four occurring in the first five trading days of the month. Although historically a bullish month, November 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 ten times in the last 39 years (since 1984). The Russell 2000’s average decline is 0.39% 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.