The U.S. stock market has witnessed a notable rally recently, with the S&P 500 index serving as a pivotal element in this upward momentum. Historical trends suggest that this could be a prime moment for investors to engage with the market.
In particular, the late October timeframe marks the beginning of the most favorable trading period for U.S. equities in the fourth quarter, a trend consistently reflected in the past.
Market analyst Holger Zschaepitz shared in an October 29th tweet on X that data reveals strong seasonal trends for both the S&P 500 (SPX) and the Nasdaq 100 (NDX) as the year nears its end.
Zschaepitz noted insights from Goldman Sachs (NYSE: GS), led by expert Scott Rubner, which suggest that U.S. stocks typically see steady gains from October 27 until December 31.
Research indicates that since 1928, the S&P 500 has achieved a median return of 5.22%, with a notable average of 6.25% during election years.
For potential investors, a prior analysis from Finbold highlighted effective strategies for navigating the S&P 500 index, including buy-and-hold, intraday trading, and after-hours trading.
NDX Historical Returns
In contrast, the technology-oriented Nasdaq 100 (NDX) has shown even more remarkable returns during this timeframe. Since 1985, the NDX has generated a median return of 11.74% between October 27 and December 31.
This historical data may alleviate recent worries regarding a potential recession.
The year-end rally is usually driven by a combination of factors, including corporate earnings and heightened retail investment, which foster a favorable atmosphere for stocks during a period of reduced volatility.
This optimistic outlook aligns with analysts’ expectations for a continuous rally as the year unfolds. For instance, economist Henrik Zeberg has forecasted that the S&P 500 index could reach as high as 6,000 points.
What Lies Ahead for the S&P 500 Index
Examining the performance of the index, the S&P 500 is aiming to solidify above the 5,800 mark. An October 28 update from Wall Street Charts on X noted that the SPX is encountering difficulties breaking through the resistance range of 5,850–5,870. A successful breach of this area could signal further upward movement.
The analyst also pointed out that if the index remains between 5,800 and 5,850, it may break out in either direction. Despite these resistance points, the S&P 500 has achieved its strongest 12-month performance since 1954.
Meanwhile, the upcoming presidential elections in the United States on November 5 are critical to the future direction of the stock market.
The anticipated policies of the presidential candidates continue to ignite speculation about market reactions, with institutional investors suggesting that a victory for Donald Trump could reinforce equity markets.
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