Trying to Predict Stock Patterns Each Year

Physician's Money Digest, February 2007, Volume 14, Issue 2

Bottom Line

The fluctuation of the stock market canbe overwhelming, especially for a physicianwhose tight schedule doesn'tallow them much time to researchthe rises and falls of the market. Butas outlined in a article,stocks follow certain yearly patternsthat anyone can learn to predict.The "sell in May and go away" ruleof thumb is key for any investor.Stocks tend to stagnate betweenMay and October since April'staxes have left people low onextra cash. The summer months are alsoslow because even investors go on vacation.After Labor Day, the fall rally begins,primarily in November, as market activityincreases with approaching holidays andrampant spending. The last 5 trading daysof December and the first 2 in January areknown as the Santa Claus Rally. Statistically,the S&P 500 Index has gained 1.5%during that period. In January, chances arethat if stocks rise for the month, the marketwill follow suit the rest of the year. Theexception is during times of war—themarket won't see the same surge becauseof wartime inflation.