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Buy November's Historical Bull Cycle?

Thursday, 1 Nov 2012 | 4:44 PM ET
Andrew Unangst | Photographer's Choice | Getty Images

Stocks got off to a great start for the month Thursday, with the Dow posting its largest gain since Sept. 13. After a lousy October, will the market reverse its course and end the month in the black?

November marks the start of the Stock Trader's Almanac "Best Six Months Switching Strategy," which involves investing in the Dow Jones Industrial Average between Nov. 1 and April 30, and switching to fixed income for the other six months.

Since 1950, November has been the second-best month of the year for the S&P 500 and third for the Dow. Historically, it's also the start of the most bullish months of the year, up to April.

In the past 12 years, the Dow posted a gain of 1.24 percent in November, while the S&P 500 and Nasdaq Composite Index have averaged a return of 0.67 percent and 0.22 percent, respectively (The average for the Nasdaq goes up to 2.32 percent, if you exclude the 23 percent drop the index suffered in Nov. 2000 during the "tech bubble" burst).


The table below highlights the Dow industrial average's performance in November compared to its returns in other months. Since 2000, November has been the index's fifth-best month.


Among the major S&P 500 sectors, materials and industrial companies have performed the best in November, with an average gain of 3 percent and 2 percent, respectively.

Historic Performance in November

Dow industrials since 1972:

  • On average, the Dow industrial average has gained 1.26 percent during November
  • Up 68 percent of the time
  • The best November was in 2001, when the average rose 8.6 percent
  • The worst November was in 1973, when the average fell 14 percent
  • November ranks as the fourth best month out of the year for the Dow industrials
  • On average, the Dow industrial average has increased 1 percent during November when October was a negative month, up 70 percent of the time

S&P 500 since 1972:

  • On average, the S&P 500 has gained 1.2 percent during November
  • Up 65 percent of the time
  • The best November was in 1980, when the index rose 10 percent
  • The worst November was in 1973, when the index fell 11 percent
  • November ranks as the fifth best month out of the year for the S&P 500
  • On average, the S&P 500 has increased 1 percent during November when October was a negative month, up 70 percent of the time

Nasdaq Composite Index since 1972:

  • On average, the Nasdaq index has gained 1.6 percent during November
  • Up 65 percent of the time
  • The best November was in 2001, when the index rose 14 percent
  • The worst November was in 2000, when the index fell 22.9 percent
  • November ranks as the third-best month out of the year for the Nasdaq index
  • On average, the Nasdaq index has increased 1.5 percent during November when October was a negative month, up 77 percent of the time


Comments? Ideas? Send them to giovanny.moreano@nbcuni.com

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