Sunday , 16 June 2024

How Will the Markets Perform For the Balance of 2014?

The S&P 500 just extended its winning streak to seven straight quarters, and it’sinvesting-hold-buy-sell reasonable to wonder just how long it can continue…[That being said, however,] investors often enjoy a strong wind at their back in the fourth quarter, based on seasonal patterns and stock market history. Will 2014 be different [or will, as history suggests,] investors find a shiny new quarter during the next three months? [This article looks at these patterns to come to a better understanding of how the markets likely will perform for the balance of 2014.]

The above introductory comments are edited excerpts from an article* by Chris Kimble ( entitled 3 Reasons Why Stocks Could Mint a Shiny Fourth Quarter for Investors.

Kimble goes on to say in further edited excerpts:

Studying seasonal cycles can help investors gain perspective and align themselves with likelier outcomes. When looking at the S&P 500 [below it is evident that] more than 50% of the index’s gains over the past 25 years took place during the final 3 months of the year. (Source: Doug Short)


Below are 3 reasons why history suggests investors can expect good things the next 3 months even if the economy faces questions:

1) ‘Sell in May’ goes the other way

For whatever reason, the stock market tends to do well in the 4th quarter. It’s the beginning of the November through April period. The ‘sell in May’ goes the other way.

Since 1950 the 4th Qtr. of the S&P 500 has:

  • posted an average gain of more than 4%,
  • and has finished higher 78% of the time.

In fact, we are entering the half of the year that tends to be strong for the S&P 500. Since World War II:

  • the average gain has been 15.3%
  • and the frequency of advance has been 94%.

2) The Presidential Cycle

Breaking down all 16 quarters during a 4-year Presidential Cycle since 1950 found that:

  • the 4th Qtr. of the 2nd year has the highest return average…
    • with an average of 8% and
    • rising 88% of the time.

Given that President Obama is in his 2nd term this is the 6th year in office and the following is what happened during the 6th year of the administrations of Eisenhower, Reagan, Clinton and Bush:

  • the average return was 23.24%
  • rising 100% of the time


     3) The Santa Claus Rally

One big reason the 4th Qtr. tends to be strong is that December is a great month for the stock market.

Since 1928, the S&P 500:

  • has its best monthly winning percentage in December with 64 gains and 22 losses and
  • generates its highest monthly gain of 1.5% in December (tied with July).


Studying seasonal cycles can help investors gain perspective and align themselves with likelier outcomes. Of course, nothing is certain when it comes to investing, and it’s important to remember that these are average returns. In other words, every year is different.

Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.


If you liked this article then “Follow the munKNEE” & get each new post via

Related Articles:

1. Take Note Because Those Investors Who Ignore These Observations Do So At Their Great Peril

Is a major top at hand? It is often said that bells do not ring to signal the end of a bull market but if the broad averages were in fact to plummet in the weeks ahead, never forget that bells did indeed ring. This article contains the opinions of three heavyweights in the guru world which are so insightful that any investors who ignore their observations do so at their great peril. Read More »

2. History Says “Expect An Economic Crash AGAIN In 2015″ – Here’s Why

Large numbers of people believe that an economic crash is coming next year based on a 7-year cycle of economic crashes that goes all the way back to the Great Depression. Such a premise is very controversial – some of you will love it, and some of you will think that it is utter rubbish – so I just present the bare bone facts below for you decide for yourself if it is something to seriously consider protecting yourself from in 2015. Read More »

3. This Weekend’s Financial Entertainment: “A Stock Market Crash IS Coming!”

Our financial system is in far worse shape than it was just prior to the financial crash of 2008. The truth is that we are right on schedule for the next great financial crash. You can choose to ignore the warnings if you would like but, ultimately, time will reveal who was right and who was wrong and, unfortunately, I think I will be proven to have been right. Read More »

4. Coming Stock Market Enema Will Be A VERY Messy Occasion!

Who knows how long before the Dow Jones Index finally receives a well overdue market enema, but I can assure you of this, when it arrives it will be a VERY messy occasion! Read More »

5. Present Bull Rally In Stocks Dangerously “Beyond the Pale” – Here’s Why

It is frighteningly clear to any objective analyst and/or intelligent investor that the present bull market rally in stocks (2006-2014) is “beyond the pale” (outside the bounds of acceptable behavior) i.e. the excess valuation is dangerously above the market excesses of the 1920s. Read More »

6. What Role Do Oscillators, Standard Deviation & Mean Reversion Play In YOUR Investment Management Process?

In the investment management process…[it is important to] actively monitor both short- and long-term cycles…in order to manage expectations based on historical patterns…[as well as] oscillators – diagnostic tools that help us measure a security’s upward and downward price volatility – but to understand how oscillators work, though, you first need to become familiar with standard deviation and mean reversion. In this article, we do just that. Read More »

7. Should Financial Market Cycles Play A Role In Your Decision-making Process?

Financial markets are influenced by relatively predictable cycles and should play a big role in one’s decision-making process just as they do in our day-to-day lives. This article takes a look at several and discusses their relevance to one’s investment management process. Read More »

8. What Does the “Market Map Model” Say About Future Direction Of U.S. Stocks, Interest Rates & Commodities?

If the past long-term cyclical correlations between interest rates, equities, and commodities were to play out as they have done going back to the 1880s, U.S. stocks and interest rates should continue to rise as commodities either fall or underperform according to a 60-year cyclical pattern model referred to as The Market Map. Read More »

9. These 6 Indicators Reveal A Great Deal About Market’s “Upside” Potential

Trying to predict markets more than a couple of days into the future is nothing more than a “wild ass guess” at best but, that being said, we can make some reasonable assumptions about potential outcomes based on our extensive analysis of these 6 specific price trend and momentum indicators. Read More »

10. Bubble-level Valuations Don’t Cause Bear Markets! These Factors Do

So much analysis we see and hear lately is concerned with whether the stock market is in a bubble or not. The truth of the matter, however, is that bear markets do not begin due to bubble-level valuations being reached and then bursting, but in anticipation of half a dozen mitigating factors as outlined in this article. Read More »