The seasonal or annual price pattern for SP500 futures has been upside down for most of this year. Normally, based on 1982 to date, the market tops in February, and it bottoms in October.
The pattern for the DJIA from 1928 to present is similar except for a tendency to double top in February/March and double bottom in September/October.
These are averages of when the market has bottomed and topped, and are useful.
Norman Fosback, building on earlier work by Arthur Merrrill, has cleanly documented in real time that there are smaller periods with the year which correspond to profitable, tradable, rising periods compared to all other patterns. you can read a bit about it at his website http://www.fosback.com/ I won't give away his proprietary and trade-marked method but many of the favorable periods are around month ends and major US holidays. We are in one right now and November and December have several others. Also there are four year and election cycles which you can Google and read about elsewhere.
The sum of all these statistical observations and cycle divinations is that the market should continue up from here. The sceptics and outright bears have all been wrong, and the markets have risen despite all of this and despite sentiment indicators and most certainly despite economic "thought".
I do believe that sentiment is often useful, but not always. This year has been a lot like 1993 or 1995 when volatility subsided or remained low throughout long advances. Also traditional sentiment analyses of stock and index options and futures open interest have not been helpful. These data are double-edged. It is well to remember that large scale buying of short hedges (put options and short futures) often accompanies the buying of stocks by large institutions and can be read as bullish, as are margin debt levels. 1995's do occur!
About a year ago I and several people I know discussed a ten year or decennial pattern wherein the mid part of the decade has a flat high consolidation follwed by a low volatility and very generous bull market. The range bound consolidation lasts one to more than two years before the breakout. Until the breakdown in May I was a big fan of this pattern, but I thought August was too late for it still to be operative. Well it wasn't too late, and the pattern may still be operative. I'll just show you the charts from the 1930's, 1980's 1990's and now, without comment.
Short term I expect a pullback, but it's possible we could see an extension of this low volatility breakout since August.
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