Due to low inflation and yields, stocks still remain the best game in town. This was reflected in the first half of 2017 by strong performance in domestic and international equities. In the U.S., equity performance was stronger than normal for the first year of a presidency. The U.S. DJIA, S&P 500, and Nasdaq rose, 12%, 19%, and 11%, respectively, to recent peaks. Likewise, Asia enjoyed strong gains with the AAXJ rising over 30% to last week’s highs. In Europe, the Stoxx 600 was up about 10% through May before tapering off over the past three months. This raises three questions. First, what does typical seasonality look for the last quarter of the year? Second, when there are exceptions to these patterns, what do they normally look like? Third, given historical patterns and the current quantitative and technical patterns seen through the O’Neil Methodology lens, how should U.S. portfolios be positioned for Q4?
