acting-man.com / Dimitri Speck / July 20, 2017
Old Truism
Readers are surely aware of the saying “sell in May and go away”. It is one of the best-known and oldest stock market truisms.
And the saying is justified. In my article “Sell in May and Go Away – in 9 out of 11 Countries it Makes Sense to Do So” in the May 01 2017 issue of Seasonal Insights I examined the so-called Halloween effect in great detail. The result: in just two out of eleven international stock markets does it make sense to invest during the summer months.
But is “sell in May” really the best recommendation? After all, it is merely a saying based on general experience. We will take a closer look at the seasonal pattern below.
The Precise Seasonal Pattern of the Russell 2000 Index
The small and mid-cap index Russell 2000 exhibits particularly pronounced seasonal trends. That makes it very useful for the purpose of seasonal analysis.
Unlike a standard price chart, the seasonal chart of the Russell 2000 depicts the average pattern that emerges in the index in the course of a year. The horizontal axis shows the time of the year, the vertical axis the average percentage changes over the past 30 years. The seasonal trends of the index can be discerned precisely at a glance.
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