The Best Months for the Stock Market
Monthly Patterns for Stock Market Investing
Monthly patterns include which months have performed best and worst for stocks over the last 10 years. Stock market monthly patterns are the directional tendencies of the stock indices based on the time of the year. Certain times of the year tend to be more bullish for stocks, while other times during the year are more bearish. Monthly patterns are similar to trading chart patterns. Chart patterns are trends that form within the price action and can be used to find favorable investing opportunities. Both chart patterns and seasonal price patterns are helpful tools that investors can use to enhance their investing. Some investors and traders may use seasonal tendencies to build strategies or enhance existing ones.
Stock Market Monthly Performance for the Last 10 Years
To give you a better idea of the best and worst months of the year, we will look at three major stock indices, the NYSE Composite, the S&P 500, and Nasdaq 100. The NYSE Composite is all the stocks listed on the New York Stock Exchange. The S&P 500 includes only the largest companies in the US, and the Nasdaq 100 includes large companies that are primarily technology-based.
In the 3 charts below, the number at the top of the column is the percentage of time the stock index has risen. If it says 50, that means the stock index went up in that month 5 years out of 10 (50%). The number at the bottom of the column is the average gain or loss in that month over 10 years.
NYSE Composite
NYSE Composite best and worst months over the last 10 years (2013-2022)
S&P 500
S&P 500 best and worst months over the last 10 years (2013-2022)
Nasdaq 100
Nasdaq 100 best and worst months over the last 10 years (2013-2022)
Conclusion: Stock Market Investing Monthly Patterns
Think of seasonality as a tool, not a crystal ball. It shows historical tendencies, not what will happen this year. If the market tends to rise 80% of the time in April, that means it went up in April 8 years of out the last 10, but it may not go up this year. Seasons patterns can be useful, but they can also be traps if we blindly follow them. Risk management must always be used to control losses, yet that may also mean getting out of some trades which would have otherwise been profitable if the favorable seasonal statistics play out.
Happy Investing, Verdia
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