“We believe large-cap US equities will resume their march North once the Q-3 window dressing-induced selling has finished”– Paul Ebeling
Historically, Q-4 of any yr is the strongest, gaining 3.8% in price since Y 1945 and rising 77% of the time.
This seasonal strength persisted during mid-term election yrs, when the S&P 500 recorded an average gainer of 3.1% in October, followed by advances of 2.4% and 2.1% for November and December, respectively.
Plus, all sectors posted price increases, led by IT and Consumer Discretionary. The weaker performers traditionally were Energy and Utilities
Fundamental factors that may prove supportive of equity prices in the coming Quarter include low interest rates, a gradually improving US economy, a favorable Q-3 EPS and forward guidance, a lack of attractive alternatives, if you rule out crypto, and a high wall of worry.
With the Fed likely to keep their finger off of the rate-hike button until the middle of next yr, combined with continued signs of a strengthening USD on economic and fundamental improvements, we believe large-cap US equities will resume their march North once the Q-3 window dressing-induced selling spree has finished.
Taking history one step further, there are 17 sub-industries that beat the S&P 500 by 60% or more during Q-4 since Y 1990: Air Freight & Logistics, Communications Equip., Consumer Finance, Diversified Metals & Mining, Drug Retail, Electric Utilities, Footwear, Health Care Distributors, Homebuilding, Industrial Conglomerates, Integrated Telecom Services, Oil & Gas Equip. & Services, Oil & Gas Exploration & Production, Paper Products, Personal Products, Pharmaceuticals, and Semiconductors.
Have a prosperous day, Keep the Faith!