Strong stock market gains may be imminent, if historical seasonal patterns hold. The six months of November through April have posted amazingly superior gains relative to the six months of May through October over recent decades. The underlying fundamentals are in place to continue this pattern.

Over the past fifty years, the entire gain in the Dow Jones Industrial Average has occurred during the six months of November through April.

The May through October period has produced a net decline.

More specifically, $1,000 invested in the stock market in 1950, if kept in stocks from May 1 through October 31 each year (and moved into cash the rest of the year), would now be worth approximately $870.

It is not a cliche that the summer months are bad for the stock market -- it is a fact. The old adage "sell in May and go away" is not just a cute aphorism but is founded in reality.

The November through April months, however, have been a boon for stock investors.

An investment of $1,000 back in 1950, if kept in the market for only those months, would now be worth approximately $62,700.

To recap: $62,700 as compared to $870 based on the same original $1,000 investment, simply from consistent timing differences.

This seasonal pattern is simply too powerful to ignore.

This seasonal pattern has been evident in 2009, 2010, and 2011.

The typical summer weakness did not occur in 2009, as the market was still coming off the lows produced by the financial crisis of 2008. The S&P 500 index rallied 18.7% in the May 2009 through October 2009 period, contrary to the long-term pattern.

But the rally continued from November 2009 through April of 2010, with the S&P 500 index up 14.5%.

Then, in 2010, the rally faded during the summer. From May 2010 through October 2010, the market was essentially flat, producing a 0.2% decline in the S&P 500 index.

As the chart below shows, however, the summer months were actually far weaker than that flat figure for the six months.

From May 2010 through August 2010, the S&P 500 languished, posting an 11.6% drop. The concern centered around, you guessed it: European debt woes. A rally in September and October, a bit premature for the typical six-month pattern, pulled the market even for that period. But the summer weakness was clear.

The S&P then rallied from November 2010 through April 2011 of this year with a 15.2% gain.

The summer pattern then set in again this year.

Since May 1, 2011, the S&P 500 is down 9.2%.

This frequent pattern does not go ignored in the marketplace, but it is usually dismissed. This is in large part because analysts are habitually backward-looking and caught up in conventional wisdom of the day.

In early May of this year, there was talk that the recent rally would continue (of course) and that "sell in May" wouldn't apply this year. Few analysts dared counter the prevailing bullish sentiment.

At present, talk of a seasonal rally is being dismissed because of the heavy focus on the European debt crisis that has caused the summer downturn. There have been repeated analysts on TV and in print saying the upside for the market is constrained because "it is absurd to think the European debt crisis will soon be solved," as if that proves a bearish case.

The current conventional wisdom is that the market will continue to be driven by headlines out of Europe, and that nothing else matters -- even earnings, the most fundamental of all fundamentals.

Yet, the pattern regularly occurs when least expected. And the fundamentals suggest another bullish seasonal move is possible in the coming six months.

The stock market has declined this summer because of the understandable concerns about the European debt crisis. During the past six months, however, the fundamentals have improved.

The S&P is now trading at just 11.5 times forward four quarter estimated earnings and just 13 times trailing twelve month earnings (including partial estimates for the third quarter). That is incredibly cheap relative to bond valuations.

Earnings on the S&P 500 are up 13% over last year, but the market is up only 4.9%.

The dividend yield on the S&P 500 is 2.02%, rivaling the 2.19% 10-year Treasury note yield.

Fears of a double-dip recession have eased. Third quarter real GDP will post an increase of about a 2% annual rate. Economic trends are sufficient to produce solid earnings growth next year.

All of this means the market may be coiled to spring higher -- even without any improvement in the European debt crisis.

After all, the debt crisis has been around a while.

The S&P 500 is up 29.6% from three years ago today.

It is very possible that a year from now the market remains obsessed with the possibility of a European debt contagion that threatens economic growth and earnings. Europe may well continue to muddle through the problem without any full resolution. In fact, it will probably take years for debt issues to clear.

Yet, with higher earnings, higher dividends, and improving U.S. economic conditions, the stock market can (continuing the trend of the past three years) be higher a year from now with an equivalent or lower risk premium for the European debt crisis as a restraining factor on stock multiples.

This is essentially what has happened over the past three years. The risks from a European debt crisis and a double-dip U.S. recession have persisted. Yet, the stock market has risen about 10% per year.

And most of the gains, consistent with historical seasonal patterns, have occurred in the November 1 through April 30 time period.

Regardless of the underlying fundamentals, it is undeniable that the best period for the stock market historically has been the November 1 through April 30 timeframe.

This seasonal pattern has been stunningly consistent over the long run; so much so that your current author, a hard-core fundamentalist, attaches significant importance to it.

There is the potential for another strong seasonal rally in the coming six months. The fundamentals have improved during the past six months even while the stock market has declined. Earnings have risen, but stock prices have declined.

Therefore, so long as the European debt problem remains contained (it does not have to get better or go away, just not get worse), the stock market could post another seasonal rally to reflect the improved fundamentals.

It is not hard to imagine a repeat over the next six months of the 15% gains the stock market posted each of the past two years during the historically favorable November through April period.