10 seasonality trends in the UK stock market

Below is a list of 10 seasonality trends that can be found in the UK stock market-

  1. Sell in May – This extraordinary effect remains as strong as ever: since 1982 the market in the winter months has out-performed the market in the summer months by an average 8.8 percentage points annually.
  2. January effect – Performance in January tends to be inversely proportional to company size (i.e. small cap companies out-perform large-caps).
  3. Construction sector – One of the most well-known seasonality trends is the out-performance of the construction sector in the first quarter of the year (in fact the sector’s strong period today is more likely to be the three-month period Dec-Feb).
  4. Month of the year – April and December are the strongest months in the year for the stock market, while May, June and September are the weakest.
  5. Day of the week  – Wednesday is the new weakest day of the week (Monday used to be), and the strongest days are now Tuesday and Thursday.
  6. Turn of the month – The market tends to be weak a few days either side of the turn of the month, but abnormally strong on the first trading of the new month (except December).
  7. Holiday effect – In recent years the market has been significantly strong on the days immediately before and after holidays and weak fours days before and three days after holidays.
  8. Quarterly sector performance – Individual sectors display different and consistent return characteristics for each quarter of the year.
  9. FTSE 100 v S&P 500 – Although since 1984 the S&P 500 has overall greatly out-performed the FTSE 100 (+1021% against +575%), there are months in the year when the FTSE 100 fairly consistently out-performs the S&P 500.
  10. Christmas and New Year – The trading days around Christmas tend to have a particular pattern of returns.

These seasonality trends, and others, are covered in the new edition of the UK Stock Market Almanac just published.

Order your copy now!

 

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