Can We Buy November's Historical Bull Cycle?

Asian markets were mixed following Friday's tech-driven rally on Wall Street, as investors look ahead to crucial U.S. inflation data due Tuesday.

Stocks got off to a great start for the month Thursday, with the Dow posting its largest gain since Sept. 13.

After a lousy October, will the market reverse its course and end the month in the black? November marks the start of the Stock Trader's Almanac "Best Six Months Switching Strategy," which involves investing in the Dow Jones Industrial Average between Nov. 1 and April 30, and switching to fixed income for the other six months.

Since 1950, November has been the second-best month of the year for the S&P 500 and third for the Dow. Historically, it is also the start of the most bullish months of the year, up to April.

In the 31 years between February 1992 and September 2023, the S&P 500 index (in USD) obtained a compound annual growth rate of 9.84%, a standard deviation of 14.79%, and a Sharpe ratio of 0.63.

So far in 2023 (YTD), the S&P 500 index has returned an average 13.07%.

In the 33 years between February 1990 and September 2023, the Dow Jones Industrial Average index (in USD) obtained a compound annual growth rate of 10.48%, a standard deviation of 14.71%, and a Sharpe ratio of 0.67.

In the past 12 years, the Dow posted a gain of 1.24 percent in November, so far in 2023 (YTD), the Dow Jones Industrial Average index has returned an average 2.73%.

In the 16 years between July 2007 and September 2023, the Nasdaq 100 index (in EUR) obtained a compound annual growth rate of 16.11%, a standard deviation of 17.83%, and a Sharpe ratio of 0.88.

Nasdaq Composite Index have averaged a return of 0.67 percent and 0.22 percent, respectively (The average for the Nasdaq goes up to 2.32 percent, if you exclude the 23 percent drop the index suffered in Nov. 2000 during the "tech bubble" burst).

So far in 2023 (YTD), the Nasdaq 100 index has returned an average 36.03%.

If we consider these statistics, in the past 20 years, the Dow has posted average gains of 1.9% in November, third best of all 12 months.

In the previous bull run that began in March 2009, the broad Standard & Poor’s 500 stock index has gained 1.75% in November, vs. the average gain of 1.2% in Novembers since 1983.

In years like 2017, when stocks have been up 10%-plus thru October, the S&P 500 averaged a November gain of 2.7%. It finished up 87% of the time.

Appreciate if you could share your thoughts in the comment section whether you think this November will be another bull cycle?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.