Everything in this world has cycles, including the stock market. Stock market seasonality is when the stock market tends to perform better during certain times of the year and tends to perform worse during certain times of the year (from a probability perspective).
Whether or not you recognize it, you’ve probably heard about the stock market’s seasonality from mainstream financial media. This includes:
Mainstream financial media tends to place too much emphasis on seasonality factors. In my opinion, seasonality factors are of secondary importance when compared to understanding the stock market’s fundamentals and technicals. Much of the stock market’s seasonality is just random.
With that being said, here is an in depth look at the stock market’s popular seasonality patterns. Let’s look at 4 things:
Random probability of the stock market going up on any given month
To understand seasonality factors such as the Santa Claus Rally, we need a benchmark to compare it against. Here’s the random probability of the stock market (S&P 500) going up on any given month, from 1950 – present
