Halloween Trading-Daily Pennant Formation In The S&P 500

Posted Tuesday, October 31, 2017 by
Shain Vernier • 2 min read

Believe it or not, there is an investment strategy that prompts investors to go long U.S. equities on Halloween of every year. Historical data sets show that the U.S. equity indices perform best during the six month period beginning in Halloween and ending in April.

It seems that the world of active trading gives us a million of these types of generalizations. While they may be factually accurate, their usefulness is limited. Personally, I lean more towards market technicals than to seasonal trends. To each his own.


S&P 500 Technical Outlook

It seems that indecision is ruling the day in December E-mini S&P 500 futures. The breaking Manafort indictment and Wednesday’s FOMC announcement have investors taking a wait and see approach. The result is a tight pennant pattern on the daily timeframe.


S&P 500December E-mini S&P 500 Futures, Daily Chart


The technicals give us an obvious bullish scenario, but that may be changing. We have a pending Bollinger MP and Daily SMA crossover. If it is completed, it will be the first since Sept. 4.



While I certainly respect the robust uptrend in the Emini S&Ps, this market is showing signs of slowing down. The pennant formation illustrates compression, and the MP/SMA crossover is an indication of a possible shift in market sentiment.

It is tempting to short this pennant formation to capitalize on a breakout. However, bucking the prevailing trend is risky, and to play the pennant correctly is capital intensive. For now, I will be watching to see how today’s closing range sets up. If we get another inside day, then a possible position trade will be in the offing for tomorrow’s session.

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