The stock market in the United States has seen a significant rally lately, with the S&P 500 index playing a crucial role in this upward trend. For investors, historical patterns indicate that now might be an ideal time to engage with the market.
Specifically, the late October period signifies the onset of the most advantageous trading phase for U.S. equities during the fourth quarter, a trend that has held true historically.
According to market analyst Holger Zschaepitz in an October 29th post on X, data reflects robust seasonal trends benefiting both the S&P 500 (SPX) and the Nasdaq 100 (NDX) as the year comes to an end.
Zschaepitz referenced findings from Goldman Sachs (NYSE: GS), under the guidance of expert Scott Rubner, which indicate that U.S. stocks tend to experience steady gains from October 27 through December 31.
Research shows that the S&P 500 has historically produced a median return of 5.22% from 1928 onward, with an even more impressive average of 6.25% during election years.
For those considering entering the market, a previous report from Finbold suggested that strategies such as buy-and-hold, intraday trading, and after-hours trading are effective methods for navigating the S&P 500 index.
NDX historical returns
Conversely, the technology-focused Nasdaq 100 (NDX) has demonstrated even stronger returns in this period. Since 1985, the NDX has yielded a median return of 11.74% between October 27 and December 31.
This historical evidence may help soothe recent apprehensions regarding a possible recession.
The year-end rally typically stems from a mix of influences including corporate earnings and increased retail investment flows, leading to a supportive environment for stocks during this time of lower volatility.
This optimistic perspective coincides with analysts anticipating a sustained rally as the year progresses. For example, economist Henrik Zeberg has predicted that the S&P 500 index could potentially reach 6,000 points.
What comes next for the S&P 500 index
Analyzing the index’s performance, the S&P 500 is working towards consolidating above the 5,800 level. According to an October 28 post by Wall Street Charts on X, the SPX is facing challenges in overcoming the resistance range of 5,850–5,870. A breakthrough above this zone could indicate further upward movement.
The analyst also mentioned that if the index remains between 5,800 and 5,850, it could potentially break out in either direction. Despite these resistance levels, the S&P 500 has delivered its strongest 12-month performance since 1954.
Meanwhile, the approaching presidential elections in the United States on November 5 are critical for the stock market’s future direction.
The anticipated policies from the presidential candidates continue to fuel speculation regarding market reactions, with institutional investors suggesting that a Donald Trump victory might bolster equity markets.
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