• Today marks the end of Q3 with US stocks enjoying a strong quarter
  • US500 testing record highs at 2509
  • Return in “worst” 6 months has been a good indicator of future performance

Today marks the final trading session of Q3 with US stock markets having enjoyed yet another impressive performance. Records have fallen in all three major US indices and the rally that began last November following the US election has shown little sign of stopping. Thursday saw a record close of 2507 for the US500 and today, we’ve already seen price move above there with price comign withing a fraction of taking out Wednesday’s all-time high at 2509.

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 The US500 has enjoyed another gain during Q3, making an all-time high just this last Wednesday. Source: xStation

According to the trading adage of “sell in May” the worst 6 months for stocks run from May until October. We are now 5 months through this period and if October passes without any substantial drop (there have been several big drops in October previously with the biggest of all coming back in 1987) then that could well be seen as a strong signal going forward.

A gain in excess of 5% for the worst six months has a great track record of predicting further gains. In fact, when there has been a gain of 5% of more from may-October there has been gains in the following 6 months in 19 of the 21 occasions this has occurred. 

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 Following a gain of 5% or more in the 6-month period from May-Oct the S&P500 (US500 on xStation) has never