The end of January is nigh. This is a quick look at how the U.S. market has performed historically in February.
First the numbers…
From this 30,000 foot view, February has underperformed badly and is one of only two months (along with September) with a negative average return since 1930.
But averages can be misleading because they say nothing about how consistent an observation has been or whether it’s waxing or waning, so below I’ve assumed a trader was only long the S&P 500 in February (red) versus the average month (grey) each year since 1930.
The graph shows that, excluding the period between 1985 and 1998, February has consistently underperformed the average month.
The second graph below zooms in on just 1985 onwards and shows that since peaking in 1998, February has continued to exhibit weakness.
Like all seasonality plays, this one has by no means been a sure thing and doesn’t by itself justify a trade, but because of the consistency of February underperformance, I’m calling the calendar month bias as WEAK.
See our monthly seasonality map for daily seasonality predictions in February.
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Filed under: Time-based | 4 Comments