Feel the Electricity

This post is more of an FYI than a specific call to action, still a reasonably good trend is a reasonably good trend.

As many investors know by now the November 1st into May time period has historically been very good for the stock market.  One of the better performing sectors during this time period has tended to be the semiconductor/electronics sectors.  Among tickers worthy of analysis are:

-FSELX (Fidelity Select Electronics mutual fund)
-SMH (HOLDRs Semiconductor ETF)

In a nutshell, the semiconductor/electronics sectors tend to perform well between October 31st and April 30th.  The results for FSELX since October 1994 appear in Figure 1.

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Figure 1 – FSELX Performance October 31 to April 30

A chart of the annual growth of $1,000 appears in Figure 2.

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 Figure 2 – $1,000 invested in FSELX 10/31 through 4.30 since 10/1994

In a nutshell:

-FSELX has been up 14 times (74%) and down 5 times (26%).
-The average gain was +18.7% and the median gain was +13.7%.
-The worst declines were -32.9% during 2000 to 2001 and -19.9% during 2007 to 2008, so remember that there is definitely risk involved

jotm20131101-02Figure 3 – Fidelity Select Electronics (Ticker FSELX) (Courtesy: AIQ TradingExpert)

Summary

Please do not read this post and think “Aha, semiconductor/electronic stocks are sure to rally.”  That is not the implication I am trying to make.  Simply remember that the “trend is your friend” and that this sector tends to perform well during this time period.  As long as these stocks act well it may be wise to give the bullish case the benefit of the doubt.

ay Kaeppel

Chief Market Analyst at JayOnTheMarkets.com and AIQ TradingExpert Pro (http://aiq.com) client
 
Jay has published four books on futures, option and stock trading. He was Head Trader for a CTA from 1995 through 2003. As a computer programmer, he co-developed trading software that was voted “Best Option Trading System” six consecutive years by readers of Technical Analysis of Stocks and Commodities magazine. A featured speaker and instructor at live and on-line trading seminars, he has authored over 30 articles in Technical Analysis of Stocks and Commodities magazine, Active Trader magazine, Futures & Options magazine and on-line at www.Investopedia.com.