Average market behaviour in November

The following chart plots the average performance of the FTSE 100 Index during November since 1984 (more info on this type of chart).

As can be seen, historically the market has increased, with a few ups and downs, throughout November, ending the month at the month high.

October 2013

The following chart shows the average performance of the market in October (1984-2012) and overlays the actual performance in October 2013.

 

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Strong/weak sectors in November

Strong sectors

The table below lists the sectors that have historically out-performed the market in November.

Sector TIDM
Life Insurance
Media
Mining
Technology Hardware & Equipment
Travel & Leisure

Weak sectors

The following table lists the sectors that have been weak in November.

Sector TIDM
Aerospace & Defense
Banks
General Industrials
Oil & Gas Producers
Real Estate Investment Trusts

 

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First trading day of November

Tomorrow will be the first trading day (FTD) of November.

As explained in the 2013 edition of the Almanac, the market has a tendency to be strong on the FTD of a month. And this effect has been even more pronounced in recent years.

Since 1984, the FTSE 100 Index has risen on average 0.17% on the November FTD. The index has had a positive return on this day in 66% of years since 1984.

Since 2000, the performance has been a little stronger on the November FTD, with an average return of 0.23% on the day.

The following chart shows the returns for every November FTD since 1984.

 

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Shares that like/dislike November

Shares that like November

The following table lists the five FTSE 350 shares that have the best returns in November over the last ten years. For example, Babock has an average return of 8.0% for the month of November. Each stock has risen in at least nine of the past ten years in November.

Company TIDM Avg(%)
Babcock International Group 8.0
Shire 5.4
Tate & Lyle 5.2
Compass Group 4.6
Premier Farnell 3.9

Shares that dislike November

The following table lists the five FTSE 350 shares that have the worst returns in November over the last ten years. For example, Rentokil Initial has an average return of -6.0% for the month of November. All five stocks have fallen in eight of the past ten years in November.

Company TIDM Avg(%)
Tullett Prebon -6.2
Rentokil Initial -6.0
AstraZeneca -2.6
Greggs -2.4
Herald Investment Trust -2.2

An equally-weighted portfolio of the above strong November stocks would have out-performed every year an equally-weighted portfolio of the above weak November stocks by an average of 9.3 percentage points in November for the past ten years.

 

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November 2012 – as history forecast

In a previous blog post we saw that while the UK market usually increases steadily throughout the month of November, the behaviour in US election years is different. As noted in the previous post, in US election years the UK market in November has displayed-

early enthusiam in the first couple of days has given way to a sell-off until a rally in the final week of the month.

and the average chart for the month in US election years is quite different to the chart for non-eleciton years.

The chart for November in US election years is reproduced below, but this is overlaid with the actual UK market performance (dark red line) this November 2012.

As can be seen, the market performed quite closely to the historical average: increasing in the first few days, then selling off, and ending with a rally to the end of the month.

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Last trading day of November

Tomorrow (Friday 30 Nov) will be the last trading day (LTD) of November.

As explained in the 2013 edition of the Almanac the LTDs of months used to be stronger than average, but in recent years they have been weak. This is quite different from the first trading days of months which strongly out-perform the average for all days, and where the effect has strengthened in recent years.

Since 1984 the November LTD has been the weakest of any month; and in the last 15 years the market has only risen three times on the November LTD.

The following chart shows the FTSE 100 Index returns for every November LTD since 1984.

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The UK market in November – average chart

As explained in the 2013 edition of the Almanac, historically UK market performance in November has been nothing special – it is 5th in the ranking of months.

The following chart plots the average performance of the FTSE 100 Index during November since 1984 (more info on this type of chart).

The chart shows that on average the UK market climbs steadily throughout the month.

US election years

However, this year is a little special as we have the US presidential election in November.The elections always take place on the Tuesday after the first Monday in November; the earliest possible date is 2 November and the latest possible date is 8 November. This year the election is 6 November.

The following chart plots the average performance of the UK market in November (as above), but only for the years in which there’s been a US presidential election.

As can be seen, historically, early enthusiam in the first couple of days has given way to a sell-off until a rally in the final week of the month.

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