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Typical Stock Market Behavior(12 months)

The stock market like any other market has a tendency to move in cycles.

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With help of Statistical data for more than a 100 years of different stock markets of the world, analysts have managed to use a typical stock market cycle (in relation to months in a year) which has proved itself right most of the time.

 

 


‘The strongest 3-month span for the stock market is November-December-January. February is then weaker, but is followed by a strong March and April. After a soft June, the market turns strong during July (Traditional summer rally). The weakest month of the year is September. The strongest month is December (known as Santa Claus rally in the western world).’


 

 

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(S&P500 being one of the most influential index to the global markets)

 

After going through the data i have categorized the 12months of the year in relation to stock market behavior into (i)Very strong (ii)Strong (iii)Very Weak (iv)Weak :-

  • JANUARY – VERY STRONG

  • FEBRUARY – WEAK

  • MARCH – WEAK

  • APRIL – STRONG

  • MAY – WEAK

  • JUNE – STRONG

  • JULY – VERY STRONG

  • AUGUST – STRONG

  • SEPTEMBER – VERY WEAK

  • OCTOBER –  WEAK

  • NOVEMBER – VERY STRONG

  • DECEMBER – VERY STRONG


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CONCLUSION

The categorization made on basis of data does not imply that the stock markets will definitely move according to it. It simply means a person can ‘expect’ something close to this to happen on basis of historical data. Nonetheless the stock markets around the world have obeyed this pattern/cycle many a times if not always. So, its not a bad idea to be aware of what the historical cycles are.

 

By

Animesh Vashisht

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