What a pathetic best 6 months of the year for the stock market that was.
According the seasonal trends, the best 6 months of the year for the stock market is November – April.
On November 1, 2022, SPY traded at $390. As of April 22, 2023, SPY trades at $412.20. That’s a gain of about 5.7%. How pathetic that was.
The short term moves up and down make it difficult to determine a direction bias with any duration.
Worst 6 Months of the Year for the Stock Market
May begins the worst 6 months of the year for the stock market. We often see traders front-run the worst 6 months of the year at the end of April. It will be interesting to see if that occurs in 2023. You would think that the probability for front-running the worst 6 months of the year for the stock market would be higher this year given the forecasted slow down in earnings expected in Q1 and Q2 and the oncoming recession everyone is convinced will begin at any time. However, the stock market likes to be unpredictable.
Chaos Theory of the Stock Market
Chaos theory deals with complex systems that behave in unpredictable ways. It suggests that small changes in initial conditions can lead to significant differences in the outcome. In the context of the stock market, chaos theory suggests that small changes in external factors, such as economic news or political events, can have a dramatic impact on stock prices. This theory challenges the traditional view of the stock market as a rational and predictable system that responds to news and events in a linear and consistent manner. Some experts argue that the chaos theory can help explain the volatility and randomness of the stock market. They suggest that the stock market is a complex system that is influenced by numerous factors, including human emotions, market sentiment, and investor behavior. According to these experts, the stock market is inherently chaotic and unpredictable, making it difficult to forecast and predict.