Market Update: Seasonality Meets Shutdown Resolution
The resolution to the government shutdown appears to be on the horizon, as the Senate passed a House bill that would extend funding through January 30. This move signals an end to the longest shutdown in U.S. history and removes a major source of uncertainty for investors. Markets have responded favorably, with futures pointing to another green open — marking ten straight positive Mondays for those keeping score.
Let’s take a look at seasonality. While November has started on a tentative note, the month also ushers in what is historically the strongest stretch of the year for equities. Since 1950, the November–April period has produced an average Dow return of 6.73%, compared to just 0.62% during the May–October span.
Although the old adage “sell in May and go away” didn’t hold much weight this year — as markets quickly recovered from the “Tariff Tantrum” drawdown — performance during the typically weaker half of the year was still exceptional by historical standards. In fact, only 8 of the last 74 seasonally weak periods have seen double-digit gains like the one we just experienced.
Ryan Detrick of Carson Research adds another interesting perspective: when comparing returns following past government shutdowns, equities have gained an average of 12.7% over the subsequent 12 months and were higher 86.4% of those times. As Washington gets back to work, this historical context paints a constructive picture for what could come next.
Seasonal data can be a bit like predicting the weather. Just because it’s winter doesn’t mean you need a snow coat every day — but knowing the season helps you prepare. Similarly, seasonality doesn’t dictate outcomes, but it helps build a framework for expectations. While last week’s sell-off challenged the bullish thesis, the broader trend remains intact. Breadth indicators, which had flashed some caution, are now stabilizing as both the S&P 500 and Dow comfortably tested their 50-day moving averages — a sign of underlying market resilience.
Conclusion: A Constructive Backdrop
As political headwinds ease and the market enters its strongest seasonal stretch, the setup for equities looks increasingly supportive. Reduced uncertainty in Washington, improving breadth, and historically favorable seasonality all suggest that the path of least resistance remains higher. While risks never disappear, a disciplined, evidence-based approach continues to favor patience over panic.
Successful investing isn’t about reacting to any one data point, but about integrating many into a consistent framework. That’s the role of active management — turning complex information into a disciplined system that adapts as conditions evolve. If you’d like to see how I’m applying that process in today’s environment, let’s schedule a time to talk.