Market Technician Wayne Whaley posted the next on Twitter (X):
A NEGATIVE FIRST THREE WEEKS OF FEBRUARY
The “First 3 Weeks of February” had been down 0.45%. Since 1950, if the First 3 Weeks of February had been destructive, the next 12 months (Feb21-Feb21) was a really regular 21-12 for an avg achieve of 6.21%. However there’s an fascinating story behind these statistics.
Seeking Bear Market Warning alerts, I as soon as requested of my pc that he scan each time span in quest of people who had a statistically vital monitor document of forecasting a double digit down following 12 months. It offered me with a handful value following, one in every of which was the incidence of a “Unfavorable First 3 Weeks of February”.
It seems that each one eight of the S&P, publish 1950, double digit down, Feb21-Feb21 years had been preceded by a Unfavorable First 3 Weeks of February. Be aware, that a “Unfavorable 1st 3 Weeks of Feb”, preceded many of the three 50% Bear Markets of my lifetime, 1973-74, 2000-02 & 2008.
Billy Bull factors out that in 12 of these 33, ‘Unfavorable First 3 Weeks of Feb’ instances, the next 12 months was double digit constructive. So, if you’re of a bullish persuasion, be happy to blow this examine off as merely an aberrational product of an excessively, bold, knowledge mining train.
However if you’re of the opinion that situations are in place to present the S&P some issues within the subsequent 12 months, the truth that all eight of the prior, publish 1950, double digit down, Feb21-Feb21, years had been every preceded by a “Unfavorable First 3 Weeks of February”, would possibly provide you with extra motive to pause.
A NEGATIVE FIRST THREE WEEKS OF FEBRUARY
The “First 3 Weeks of February” had been down 0.45%. Since 1950, if the First 3 Weeks of February had been destructive, the next 12 months (Feb21-Feb21) was a really regular 21-12 for an avg achieve of 6.21%. However there’s an fascinating story behind… pic.twitter.com/BPpBRY7FCA
Wayne principally asks the system to knowledge mine, with no elementary underpinnings and the system throw this out.
You possibly can see they have a tendency to cluster collectively. 5 of them clustered in that secular 1966 to 1982 bear market. The opposite three clustered in that 2000 to 2010 interval.
I received curious if the efficiency of the small caps or micro caps have comparable efficiency throughout these interval, so since I’ve entry to the Dimensional analysis indexes, which works again all the best way to 1927, I took a take a look at the following 1 12 months efficiency (1 Mar to twenty eighth Feb within the subsequent 12 months) for every interval Wayne introduced up:
My knowledge is month by month, in order that they gained’t precisely match up properly. However you do see that the returns for all intervals for S&P 500 and the US Giant Cap Index (SP500 is a big cap index in spite of everything) had been destructive. Simply that some weren’t double digits.
The drawdown in 1969 noticed a higher magnitude of fall for the small cap and micro cap corporations. However in another intervals, the small caps, significantly small cap worth efficiency (US Focused Worth and Small Cap Worth) might be even constructive.
If the purpose of the sport is to remain within the recreation, and having components of your portfolio do effectively when one other doesn’t, then there may be some use with diversification.
If you wish to commerce these shares I discussed, you possibly can open an account with Interactive Brokers. Interactive Brokers is the main low-cost and environment friendly dealer I exploit and belief to take a position & commerce my holdings in Singapore, the USA, London Inventory Alternate and Hong Kong Inventory Alternate. They help you commerce shares, ETFs, choices, futures, foreign exchange, bonds and funds worldwide from a single built-in account.
You possibly can learn extra about my ideas about Interactive Brokers in this Interactive Brokers Deep Dive Collection, beginning with find out how to create & fund your Interactive Brokers account simply.
Kyith is the Proprietor and Sole Author behind Funding Moats. Readers tune in to Funding Moats to be taught and construct stronger, firmer wealth foundations, find out how to have a Passive funding technique, know extra about investing in REITs and the nuts and bolts of Lively Investing.
Readers additionally comply with Kyith to learn to plan effectively for Monetary Safety and Monetary Independence.
Kyith labored as an IT operations engineer from 2004 to 2019. Presently, he works as a Senior Options Specialist in Insurance coverage Begin-up Havend. All opinions on Funding Moats are his personal and doesn’t characterize the views of Providend.
His funding dealer of alternative is Interactive Brokers, which permits him to put money into securities from totally different exchanges all around the world, at very low fee charges, with out custodian charges, close to spot forex charges.
