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The Seasonal Stock Market Handbook

Which Calendar Rules Really Work — More Than 70 Rules Tested on Up to 38 Years of Data

Sell in May and go away. The Santa Claus rally. The January Barometer. The January effect. The Dogs of the Dow. Turnaround Tuesday. The presidential cycle. Buy gold before Diwali.

For the rules of the trading day, tested the same way, see The Day Trading Rules Handbook.

You've heard them every year in the financial news. Some have been repeated for half a century. But has anyone checked whether they still beat simply owning the market?

This book did. It took 74 of the most widely repeated calendar rules and tested every one on market data since 1988: the S&P 500, along with the Dow, the Nasdaq-100, small companies, sector funds, gold and five years of minute-by-minute trading.

The question that changes everything: compared with what?

The stock market rises on most days and in most years. So almost any calendar rule can show a winning record. The day before a holiday rose 59% of the time, and the Santa Claus rally rose in 74% of years. That sounds like an edge, until you learn that the market was strong on the other days too. This book judges every rule against an ordinary stretch of the same length, checks whether luck could explain the result, and asks whether the rule still worked after it became famous.

What the tests found:

  • Sell in May cut the worst loss from 55.3% to 33.8%, but $10,000 grew to $248,565 instead of $665,198 for buying and holding. It is a risk tool, not a return tool.
  • The weeks before quarter-end are not a run-up. They have been weaker than the same weeks in other months, and the book shows the big-fund rebalancing behind it.
  • The turn of the month is real, but it's the first day, not the last. And the last day of most months has turned weak since 2009.
  • Turnaround Tuesday held up, even against other days that followed a drop of the same size. Whether you can use it depends on what you pay to trade.
  • The Dogs of the Dow trailed the Dow over 35 years, using the stocks that were actually in the Dow each year, including the ones that failed.
  • Nearly all of SPY's gains came overnight. Since 1998, $1 held only overnight grew to about $12. Held only during market hours, it grew to $1.07.
  • Gold has no reliable festival calendar, but it has beaten stocks in late summer, when stocks are weakest.

Inside:

  • A plain-English method you can use on any calendar claim you read, including a checklist you can apply in a few minutes.
  • Chapters on Sell in May, the best and worst months, Santa Claus, the January rules, the turn of the month, quarter-end, the days of the week, holidays, sector seasons, gold's calendar and the clock inside the trading day.
  • A verdict on every rule: Supported, Supported, with a limit, Not supported, Contradicted, or Too few cases to judge.
  • "What We Didn't Expect" boxes with the patterns that turned up along the way.
  • Every rule and its verdict in one table at the end.

In full color, with 19 charts and 90 tables, best viewed on a color screen or the free Kindle app. Written in plain English, with no trading system to sell you and no promises about next year.

For investors who want to know which calendar rules to act on, and which ones they can safely ignore.

Where to go next

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