Are You Ready To Trade The Best Six Months?
Have you heard? The best six months of the stock market are right around the corner. Yep, it's true. From November through April, the stock market performs significantly better than in the May-October period.
Just as fall changes to winter and then spring and summer, the stock market has seasons too. The Best Six Months are a well-documented seasonal tendency first discovered by Yale Hirsch, then editor of the Stock Trader's Almanac.
Skeptical? Take a look at the numbers: In the past 66 years from April 1950 to April 2016, the November to April period has produced an average DJIA gain of 7.4% compared to an average gain of just 0.4% during the months May to October, according to The Stock Trader's Almanac.
What causes this seasonal bump in stock performance?
- Mutual fund manager "window dressing."
This is when portfolio managers in essence clean house before third quarter statements are sent out to shareholders. They sell losers and buy top performers. It's all about looking good on those shareholder statements.
- Capital inflows from bonuses and retirement investments.
Year-end bonuses often get invested in the stock market, which helps lift the market higher in the fourth quarter and first quarter. New money also tends to flow into the stock market at the beginning of each year as pension funds add to their holdings at that time. Also, as individual investors fund their IRA accounts prior to the April 15 tax deadline that also injects more capital into the equity market.
What's in store this year?
The U.S. stock market is like the little engine that could. It continues chugging to new all-time highs. The numbers are impressive.
Just last week, the S&P 500 recorded its sixth straight weekly gain, adding 19 new all-time highs to this bull market’s tally of 175, ranking it second only to the bull market of 1990-2000’s overall sum of 308, according to the folks at CFRA Research.
What is even more interesting is the near-absence of volatility. In the past 12 months, the S&P 500 has recorded only 11 trading days in which it rose or fell by 1% or more, CFRA says.
These unique conditions make it more important than ever to approach the market with the right strategies. Are you looking for new ways to trade this aging bull market?
Here's why I am going to trade this upcoming Best Six Months with a variety of option strategies
Options give you flexibility and freedom
With an individual stock, currency or even futures contract, sometimes a market is quiet and there just isn't a good risk/reward trade to take. There's nothing more dangerous than trying to make something out of nothing. Good traders watch the markets, wait for the opportunities and trade high-probability opportunities.
With options, there are a variety of strategies that you can employ to profit whether a market goes up, down or even just goes sideways.
Options give you flexibility to profit in a number of ways not just a binary up or down trade. Plus, you can put the trade on and you don't have to be chained to your computer. Set it up and walk away. Options give you freedom in terms of time.
The SheCanTrade approach
My name is Sarah Potter. When I first started trading, I traded forex, individual stocks and even futures. I've settled on options, specifically swing trading over a 3-5 day period as my bread and butter income trades.
I look for high-probability trades I can place every single day. I cash those out, put the money in my pocket, so I can pile those profits into my next trade.
Sure I'll put on "triple your money trades" too. But, the majority of my trades are bread and butter positions that I can use to pay my bills.
Do a credit spread
Here's an example: selling a put credit spread. That means it can go up, sideways or even a little bit down and I still make money. That type of strategy increases the likelihood of success, over using a straight call.
Learn the language of options with me
Whether you are a seasoned trader or just getting started in the markets, I can help. The next six months are bound to be filled with amazing market opportunities. Don't miss out. Wondering how to get started? I've developed a series of free Options Trading Lesson Videos. Check them out here
. I'm putting on option trades every day and you can see them in my live options trading room. Join my growing community of traders. You'll be glad you did.
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