The current market trajectory continues to move along in a similar fashion to the correction of 2011. As you can see on the chart below, in October of 2011 the market had a decent rally similar to the one we just had that took the SP500 slightly above year to date break even and above the 200 day moving average. After some back and forth action, the SP500 pulled back roughly 9% inside of 2 weeks. If we continue to follow in the steps of 2011, the pullback should start accelerating now. I don’t know if we are going to get a 9% pullback or 5% pullback or any at all; I view this as a low probability event that has 10-15% chance of happening.
More importantly, we are entering the best 6 months of the year, November to April. This period has produced an average gain of 7.5% since 1950 compared to an average gain of 0.4% during May to October, this is the period to look forward to after the possible storm. —AlmanacTrader