In the Seasonal Timing System, does the beginning of a favorable seasonal period guarantee there won be a correction before the exit signal the following spring?
There are no guarantees in investing, only probabilities and odds. There have been corrections in favorable seasonal periods, but they have tended to be smaller and easier to hold through than the serious corrections and crashes that have mostly taken place during the unfavorable seasons. That is why being invested only in the favorable periods over the last 50 years more than tripled the performance of being invested also through the unfavorable seasons. Until 2008, the ‘drawdowns’ in market corrections that took place within the STS favorable seasons since 1964 had been limited to less than 10%. But in 2008, STS was down as much as 11.5% in March at its low during the favorable season before recovering to being down 3.6% by the end of the favorable season in May. And so far in 2009, it was down as much as 27% at its low in March during the favorable season, but by later in March had recovered to being down only 9%. But there is no doubt that in this bear market that began in October,
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