Historical Winds Are About To Shift

I don't buy or sell stocks based on historical trends, but history does provide us an important lesson.

Ignore it at your own peril. The bearish period from the July 17th close through the September 26th close ends today at the close. While that doesn't mean we should expect soaring prices beginning tomorrow, it is one additional indicator to at least be aware of. Here's a quick glance at how the S&P 500 has performed by month over the past 10 years - ever since the S&P 500 cleared its overhead price resistance from 2000 and 2007:

Enter S&P 500 ($SPX):

While October tends to strengthen historically, the absolute best period of S&P 500 performance begins at the close on October 27th and lasts through the close on January 18th. That period has ended higher than it began 62 of the last 71 years. Here's the breakdown of annualized returns:

• October 27th close - December 31st close: +23.21%
• December 31st close - January 18th close: +13.47%

Keep in mind that the S&P 500 averages gaining roughly 9% per year. So the above periods are much stronger than average.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.