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Wall Street History

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05/23/2008

'Cause It's Summer

It’s been a few years since I updated my summer and the markets
piece. For years market lore had you believe that the fabled
“summer rally” was the best time of year for Wall Street. Alas,
the facts prove otherwise and the summer rally, defined as the
May/June low to the 3rd quarter high, has the smallest gain of
any seasonal rally, +9.2% as represented by the Dow Jones
Industrial Average, since 1964. According to the 2008 Stock
Trader’s Almanac, here is the breakdown.

Winter rally: Nov/Dec Low to Q1 High...avg. 13.1%
Spring rally: Feb/Mar Low to Q2 High...avg. 11.0%
Summer rally: May/Jun Low to Q3 High...avg. 9.2%
Fall rally: Aug/Sep Low to Q4 High...avg. 10.9%

Of course it should be noted that summer also falls in the midst
of the worst six months for investing, historically, that being the
May 1 – October 31 period.

Well, I have my own way of looking at the numbers utilizing my
extensive market archives. For example, following is the period
between the close for the S&P 500 the Friday before Memorial
Day and the Friday before Labor Day.

1997: S&P 500 +33.4% (total return for the year)

5/23 847.03 (S&P 500) 8/29 899.47 +6.2%

1998: S&P 500 +28.6%

5/22 1110.47 9/4 973.89 -12.3%

1999: S&P 500 +21.0%

5/28 1301.84 9/3 1357.24 +4.3%

2000: S&P 500 -9.1%

5/26 1378.02 9/1 1520.77 +10.4%

2001: S&P 500 -11.9%

5/25 1277.89 8/31 1133.58 -11.3%

2002: S&P 500 -22.1%

5/24 1083.82 8/30 916.07 -15.5%

2003: S&P 500 +28.7

5/23 933.22 8/29 1008.01 +8.0%

2004: S&P 500 +10.9%

5/28 1120.68 9/3 1113.63 -0.6%

2005: S&P 500 +4.9%

5/27 1198.78 9/2 1218.02 +1.6%

2006: S&P 500 +15.8%

5/26 1280.16 9/1 1311.01 +2.4%

2007: S&P 500 +5.5%

5/25 1515.73 8/31 1473.99 -2.8%

Note: If nothing else, my look at summer just confirms the
underperformance for the period vs. the year as a whole; with the
exception being 2000. Regarding the S&P 500 closing figure of
1520 on 9/1/00, this also happened to be an important peak as
many forget that some of the broader averages had actually
recouped most of their losses from the cracking of the Bubble in
the spring of that year. It represented your last chance to get out
before the real bloodbath ensued.

Wall Street History will return next week with a return look at
oil.

Brian Trumbore



AddThis Feed Button

 

-05/23/2008-      
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Wall Street History

05/23/2008

'Cause It's Summer

It’s been a few years since I updated my summer and the markets
piece. For years market lore had you believe that the fabled
“summer rally” was the best time of year for Wall Street. Alas,
the facts prove otherwise and the summer rally, defined as the
May/June low to the 3rd quarter high, has the smallest gain of
any seasonal rally, +9.2% as represented by the Dow Jones
Industrial Average, since 1964. According to the 2008 Stock
Trader’s Almanac, here is the breakdown.

Winter rally: Nov/Dec Low to Q1 High...avg. 13.1%
Spring rally: Feb/Mar Low to Q2 High...avg. 11.0%
Summer rally: May/Jun Low to Q3 High...avg. 9.2%
Fall rally: Aug/Sep Low to Q4 High...avg. 10.9%

Of course it should be noted that summer also falls in the midst
of the worst six months for investing, historically, that being the
May 1 – October 31 period.

Well, I have my own way of looking at the numbers utilizing my
extensive market archives. For example, following is the period
between the close for the S&P 500 the Friday before Memorial
Day and the Friday before Labor Day.

1997: S&P 500 +33.4% (total return for the year)

5/23 847.03 (S&P 500) 8/29 899.47 +6.2%

1998: S&P 500 +28.6%

5/22 1110.47 9/4 973.89 -12.3%

1999: S&P 500 +21.0%

5/28 1301.84 9/3 1357.24 +4.3%

2000: S&P 500 -9.1%

5/26 1378.02 9/1 1520.77 +10.4%

2001: S&P 500 -11.9%

5/25 1277.89 8/31 1133.58 -11.3%

2002: S&P 500 -22.1%

5/24 1083.82 8/30 916.07 -15.5%

2003: S&P 500 +28.7

5/23 933.22 8/29 1008.01 +8.0%

2004: S&P 500 +10.9%

5/28 1120.68 9/3 1113.63 -0.6%

2005: S&P 500 +4.9%

5/27 1198.78 9/2 1218.02 +1.6%

2006: S&P 500 +15.8%

5/26 1280.16 9/1 1311.01 +2.4%

2007: S&P 500 +5.5%

5/25 1515.73 8/31 1473.99 -2.8%

Note: If nothing else, my look at summer just confirms the
underperformance for the period vs. the year as a whole; with the
exception being 2000. Regarding the S&P 500 closing figure of
1520 on 9/1/00, this also happened to be an important peak as
many forget that some of the broader averages had actually
recouped most of their losses from the cracking of the Bubble in
the spring of that year. It represented your last chance to get out
before the real bloodbath ensued.

Wall Street History will return next week with a return look at
oil.

Brian Trumbore