The market is about to enter an historically strong six-month period. How you play it could make a difference to your returns, according to CFRA. The rule of thumb, popularized in the Stock Trader’s Almanac, is that November through April are the strongest six months in any given year for the S & P 500 . Yet there are certain sectors that traditionally do even better, CFRA chief investment strategist Sam Stovall wrote in a note Monday. Specifically, cyclical parts of the market, such as consumer discretionary, industrials, materials, and technology sectors, are those that get an extra boost, Stovall said. The average price gains from equal exposure to these sectors was 9%, compared to 6.7% for all of the S & P 500, Stovall pointed out. From May to October, consumer staples and health care sectors outperform, he said. “The pattern is even more pronounced during the midterm election year and third year of the four-year Presidential Cycle,” he said. Since 1992, the S & P 500 gained an average 15.2% in November through April of those years. The CFRA-Stovall Seasonal Rotation Custom Index (SRCI), which tracks these sector rotations, rose an average 17.7%, Stovall said. There’s even an exchange-traded fund — Pacer CFRA-Stovall Equal Weight Seasonal Rotation ETF — that’s based on the SRCI. Investors can also get exposure through individual sector ETFs, such as the Consumer Discretionary Select Sector SPDR Fund , the Industrial Select Sector SPDR Fund , the Materials Select Sector SPDR Fund and the Technology Select Sector SPDR Fund . — CNBC’s Michael Bloom contributed reporting.
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