Category Archives for Sami Abusaad
What Is the Best Month for Stocks?
What Is the Best Month for Stocks?April is the best month of the year for the stock market, based on S&P 500 data since 1980. The S&P 500 rises 2.0% in April on average, higher than any month. The S&P 500 has also been up in 31 of the 42 last Aprils, or 74% of the time. That is the highest percentage of all months. Wilshire 5000 data also supports this notion. S&P 500 Returns By Month Since 1980 Month of the YearAverage SPX Return % Positive MonthsJanuary 1.0% 60% February 0.2% 62% March 0.8% 62% April 2.0% 74% May 0.9% 69% June 0.3% 62% July 1.0% 52% August 0.2% 60% September -0.7% 48% October 1.2% 64% November 1.8% 71% December 1.3% 73% Data Source: Investing.com April also has another unique distinction – the smallest maximum loss. In April 2002, the S&P 500 fell -6.1%, so the worst April was better than the worst of all other months. And What Is the Worst Month for Stocks?September is the worst month for stocks, with a -0.7% average decline since 1980. That makes September the only month of the year that is negative on average. The S&P 500 has risen in just 20 of the last 42 Septembers, so it was up only 48% of the time. Again, that is the worst performance among all months.Those are the simple answers. Now let’s complicate things.The Challenge With Monthly Return DataAnalyzing monthly stock market returns may seem like a simple Excel exercise. However, it is fraught with challenges, like deciding how far to go back, especially since index composition changes so much over time. There’s also the question of whether this data is even valuable. A monthly return is simply the percentage change between one month’s closing price and the next. Are you making buys and sells exactly on the close of each month, with no activity in between?There are plenty of other more important factors affecting your returns, including:Whether you are long or shortYour mix of asset classes like stocks, bonds, crypto currencies, and other assetsThe individual stocks, ETFs, and cryptos you ownThe overall market environmentYour holding timeWhen you choose to buy or sellTaxes and trading commissionsNonetheless, let’s take a deep dive and see what we can learn from average monthly stock market return data.The Best and Worst Months for the Nasdaq Composite, Wilshire 5000, and Russell 2000.The biggest problem when asking “what is the best month for stocks?” is that you need to ask a second question: “which stocks are you talking about?”So to determine whether April is really the best month for stocks, we looked at three other major indices: the Wilshire 5000, Nasdaq Composite, and Russell 2000.Next, let’s look at the Wilshire 5000, the broadest index of US companies.The Wilshire’s, best month is April with an average return of +1.9%, and it’s worst month is September.The Nasdaq’s the best month is actually January with an average +2.3% return, though the worst month is September, just like the S&P and Wilshire.For the Russell 2000, the best month is December, with an average return of +2.6%. And the worst is August with an average return of -0.3%.You can see all the numbers in this table. The best months are outlined in green with the worst months in red. Average Monthly Returns By Index Month of the YearSPX Wilshire 5000 Nasdaq Composite Russell 2000January 1.0% 1.2% 2.3% 0.7% February 0.2% 0.4% 0.6% 1.2% March 0.8% 0.6% 0.4% 0.8% April 2.0% 1.9% 1.9% 1.7% May 0.9% 1.0% 1.4% 1.2% June 0.3% 0.4% 1.0% 0.7% July 1.0% 0.8% 0.7% -0.2% August 0.2% 0.3% 0.6% -0.3% September -0.7% -0.7% -0.6% -0.1% October 1.2% 1.0% 1.2% 0.2% November 1.8% 1.8% 2.2% 2.1% December 1.3% 1.4% 1.6% 2.6% Data Sources: Investing.com, Yahoo Finance! Please Note: our Russell 2000 data only goes back to 1988, while our S&P 500, Wilshire 5000, and Nasdaq numbers go back to 1980. Still, we believe this is more than enough data to support the idea that April is the best month for stocks. Is November the Best Month for Stocks?Many investors argue that November is the best month for stocks. But the Wilshire 5000 is the broadest measure of the US market, and it points to April as being the strongest month. But arguing over “best” may be silly because the data suggests that different types of stocks do better at different times of year. And we’re not talking about huge differences anyway.Why Not Focus on the Median?If we go by median monthly returns, November actually becomes the best month for stocks. But average returns make more sense because investing returns are heavily impacted by statistical outliers, which would be excluded when using the median.Now let’s go through some of the more interesting individual findings.October Stock Market Returns – The Weird Thing We NoticedThe S&P 500 was positive in 27 of the last 42 Octobers, with an average return of +1.6%.The two worst months for the S&P 500 since 1980 were:-21.8% in October 1987, when we had the Black Monday crash-16.9% in October 2008 during the housing meltdownExcluding these months, the S&P 500 has been up on average of 2.2% each October. So outside of generational disasters, October is generally an outstanding month. S&P 500 October Returns Since 1980 All OctobersOctobers Minus the 2 Outliers+1.6% +2.2% Data Source: Investing.com And that brings us to another point regarding monthly returns. There is a great deal of chance involved, and one or two generational outliers can dramatically impact the numbers. Does One Month Mean Anything for the Next?The stock market on average returns +0.84% per month.After an up month, the market returns an average of +0.86%.And after a down month, the market is up an average of +0.82%.So one month doesn’t seem to mean much for the next, with one exception that we found:What About the January Effect?December may have a small impact on January.After positive Decembers in the S&P 500, January has been up 74% of the time with an average return of +1.2%.That’s a slight increase from the overall January average
Continue Reading -->Riding the Rollercoaster into 2022
Sami was bearish around 2 weeks ago when the market looked like it could break the weekly trend. But now, after last week’s bullish move, it’s starting to look a little lower again, although it could be moving back up soon. In this video, Sami explains: – What he likes so much about CYH – His wish for INVZ – The two setups that can be found in PIRS – What SGRY reminds him of – Where he’s placing a target on TRHC
Continue Reading -->Weekly vs. Daily Chart – Which One Wins?
It looks like the market is rolling over on a daily chart and is looking overall bearish. Sami is expecting a selloff this week, but the weekly chart is maintaining an uptrend. Which chart will fail, and which one will prevail? In this video, Sami explains: – Why the market has stayed relatively close to the ATH – When a breakout might trigger in ASPU – How AVIR compares to ARDX – Where he finds most of his swing plays – Which 3 telecom stocks he’s watching
Continue Reading -->Is the Market Bullish Now?
The market had a major reversal last week, and the SPY is now bullish (QQQ is close, but needs to break out more). Which indices should you be watching to determine market movement this week? In this video, Sami explains: – Why FLR is still a long swing idea for this week – What looks good about FULC – Which JXN chart looks the best – Where to find a transition A breakout in MTCR – How to find an entry in a stock like PDBC
Continue Reading -->Breaking the Market Trend
The market looked like it would roll over bearish last week, and it did. So now the SPY is testing the 20 ma and Sami thinks that it won’t hold like it has in the past. Find out what he’s predicting the market will do in the coming days. In this video, Sami explains: – How to find a head and shoulders pattern in QQQ – Which stocks are unaffected by the market selloff – Where CIEN could go if it takes off upward – Why he changed his sentiment on OLMA – What the next few weeks could look like for EH
Continue Reading -->How to Trade After the Black Friday Drop
Even on a half day, Black Friday brought a trend break to the market with news of the Omicron variant. Should you plan for the trend to turn back up or will it continue down? Find out what Sami’s thoughts are for market movement this week. In this video, Sami explains: – What he’d be extremely surprised to see in QQQ – The one name he’s looking to play long this week – When KRNT might trigger long – The reward-to-risk ratio for PSTH – Where he would add to a short position in AFIB
Continue Reading -->Trading a Top-Heavy Market
There’s a divergence in the indices, making the market top-heavy. Sami says you can expect a rotation, but right now his view of the market is dependent on what exactly you’re looking at. In this video, Sami explains: – Why AMRS is not a typical play – The type of breakout in ARWR – What he’s watching before he plays FCX – How to find a bottom in a stock like PCG – His long term play idea for this week
Continue Reading -->The Pattern Most Stocks Have
We got the drop that Sami was predicting last week, and now the market’s gone back up. Find out how to trade the current buy setup and why Sami says this week is an easy call. In this video, Sami explains: – Why he only included stocks over a million shares on his watchlist – Where the entry is triggered on a 1-2-3 setup – How the IWM affected many of the stocks on his watchlist – Why he prefers GEO over EAF – One of the biggest mistakes he’s made recently
Continue Reading -->Pullback on the Horizon
Friday ended with a reversal bar in the market, and Sami’s expecting a pullback this week. How has this affected his open positions? And which moves does he anticipate are on the horizon? In this video, Sami explains: – How to find a reversal bar after a runup – His general rule for placing a stop – What would make him like CMRX as a long-term play – The two possible stop prices for DNN – How he’d trade a stock like MARA
Continue Reading -->How to Find the Line of Support
The market is starting the week all out bullish, and should continue to be bullish barring a break of the line of support. Sami will tell you where he thinks the lows of the market are for the week and where it could be heading. In this video, Sami explains: – His best trade from last week (and which name is looking the same) – Why it’s not too late to get in ANAB – How you can find an entry on a stock you like – Which name has a classic 1-2-3 pattern – Why he’d like to get in on HPQ
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