4th Quarter Trends I Have Known and Loved

  • SumoMe

The fourth quarter of the year has a history of being bullish for the stock market (although, sadly, there are no guarantees). Certain sectors have shown a very persistent bullish trend within the 4th quarter.  So let’s highlight a few examples.

See also Down the Oil Well One More Time

 5 Sector Trends of Note

 We will focus on 5 Fidelity Select Sector funds (although Rydex funds, Profunds and/or ETFs can be used as an alternative). All 5 sectors highlighted in Figure 1 begin a favorable seasonal period on the close of October Trading Day #19 (10/27/2016 this year).

 

Sector

 

Start Month

Start (close of) Trading Day #…  

End Month

End (close of Trading Day #
FCYIX October 19 December 3
FSCGX October 19 January 6
FSCPX October 19 December 22
FSHOX October 19 January 1
FSPHX October 19 December 6

Figure 1 – Seasonally Favorable Sectors

The year-by-year results for each Sector/Time Period combination appears in Figure 2.

Year FCYIX FSCGX FSCPX FSHOX FSPHX
1989 0.5 4.8
1990 16.0 9.1
1991 7.6 2.7
1992 3.2 10.1 11.0
1993 7.7 3.1 6.4 1.6
1994 9.3 (1.3) (1.7) 1.8
1995 (0.7) 6.5 12.8 6.1
1996 3.5 1.1 (0.5) 4.6
1997 11.3 12.9 3.3 8.7
1998 (4.4) 16.4 17.9 8.8
1999 4.3 13.8 13.1 8.7 0.1
2000 10.3 11.2 5.4 18.7 1.0
2001 10.9 (0.2) 6.9 17.6 (0.9)
2002 3.9 5.4 (5.1) 5.5 (1.2)
2003 7.6 13.8 4.9 4.9 3.9
2004 9.1 4.4 9.8 14.9 4.6
2005 10.2 19.3 7.9 14.3 7.9
2006 2.0 6.8 (1.6) 6.4 (0.8)
2007 (2.0) 16.1 (8.1) (10.1) 2.0
2008 6.1 4.3 14.8 32.5 4.7
2009 5.9 (6.6) 8.0 7.9 3.6
2010 7.6 14.3 8.8 17.3 4.9
2011 (1.4) 14.2 (3.8) 5.3 (2.6)
2012 3.1 15.3 2.8 8.8 1.0
2013 1.6 2.4 6.1 2.1 6.0
2014 6.3 8.5 9.3 7.0 7.4
2015 1.5 5.5 (1.9) (0.8) 4.8

Figure 2 – Year-by-Year Results

The performance results for each Sector/Time Period combination in Figure 1 appears in Figure 3.

  FCYIX FSCGX FSCPX FSHOX FSPHX
Month Start Oct Oct Oct Oct Oct
TD Start 19 19 19 19 19
Month End Dec Jan Dec Jan Dec
TD End 3 6 22 1 6
# Up 15 19 18 23 23
# Down 2 4 6 4 4
% times UP 88.2 82.6 75.0 85.2 85.2
% Times Down 11.8 17.4 25.0 14.8 14.8
Average% +(-) 5.1 7.6 5.0 8.6 3.9
Median %+(-) 5.9 7.7 5.8 7.6 4.6
Max. % Gain 10.9 19.3 16.4 32.5 11.0
Max. % Loss (2.0) (6.6) (8.1) (10.1) (2.6)

Figure 3 – Summary Results

The following charts show the growth of $1,000 invested in each sector fund only during the seasonally favorable period designated in Figure 1.

fcyix

Equity Curve for ticker FCYIX (1999-present)

fscgx

Equity Curve for ticker FSCGX (1992-present)

fscpx

Equity Curve for ticker FSCPX (1992-present)

fshox

Equity Curve for ticker FSHOX (1989-present)

fsphx

Equity Curve for ticker FSPHX (1989-present)

Summary

The 4th quarter has generally been kind to the sectors highlighted above.  That’s the Good News.  The Bad News is that – as always – there is absolutely no guarantee that any of these sectors will rise in price between now and the end of the “seasonally favorable” period designated in Figure 1.

Jay Kaeppel

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