Seasonal Profile for 4th Quarter

The Seasonal tendency for the S&P500 in the fourth quarter is usually pretty good.

• In spite of the fact that some of the biggest stock market collapses have occurred during the month of October, the month has had positive returns over the last 100 years which have grown even stronger over the last 20 years.  Over the last 20 years the return in October has been 1.36% with positive returns 70% of the time according to Bespoke Investment Group.
• October is the start of a quarter which has returned 4.57% over the last 20 years and 2.44% since 1928.
• Another stat working toward the bullish side is that the market has gained 4.9% in the fourth quarter following third quarter drops in excess of 8%.
• The bad stat comes in when the market has been in negative territory for the year the fourth quarter has returned a -1.07% for the fourthe quarter.
• The third year of a presidential cycle is almost always positive.

Although most of the indications do point toward a positive fourth quarter, we must not forget that the uncertainties involved with the European sovereign debt crisis and the contagion affect it can have, along with the ineffective austerity measures which have been put in place both in Europe and the US are the big reasons why the markets have tanked.  Unless these issues are addressed and resolved, an investor must ask whether it makes any difference what the seasonal indicators are showing.