Dan Sullivan: Too Early to Throw in the Towel on this Bull Market

By on November 2, 2012

Dan Sullivan - The ChartistThe Chartist newsletter founder, Dan Sullivan, remains bullish on the prospects for the stock market based on his technical readings and a historical pattern. He recommends a 100% allocation to equities.

Sullivan sees November as the start of a strong seasonality period. He cites a study entitled, “The Halloween Indicator: Everywhere and All the Time,” by Ben Jacobsen and Cherry Yi Zhang, which indicates the November through April period shows stock markets outperforming the May through October period in the majority of the world’s markets.

By Sullivan’s calculations, since 1980, had you followed this seasonal buy/sell approach investing $10,000 in the S&P 500, you would have amassed $88,000 by the end of 2011, versus $17,000 had you held during the April through October periods.

Sullivan also sees a positive in a popular technical indicator:

The Daily Advance/Decline Line chart could not look more bullish. We say this because the Advance/Decline Line in the majority of instances peaks out well ahead of the overall market.

Sullivan’s recent stock picks include momentum favorites Amgen (AMGN), Home Depot (HD) and Whirlpool (WHR).

Back in July 2011, Sullivan was on record saying the market would break out to the upside from its trading range, the correct call at the time [link].

Source: Forbes

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