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Wall Street is rife with patterns and seasonal tendencies that suggest the market will rise or fall under given conditions, prompting students of stock-market behavior to crunch numbers relentlessly, seeking the one indicator that will flawlessly predict the direction of stock prices.

While it’s doubtful that they would share that information if they found it, enough has been published to keep anxious investors drooling.

So what could be timelier than the “Best Six Months” indicator, discovered by Yale Hirsch and published with stats to support its premise in his Stock Trader’s Almanac for the first time in 1986.

Simply stated, over the years, the stock market, as measured by the Dow Jones Industrial Average, has performed better between Nov. 1 and April 30 of the following year than between the six months between May 1 and Oct. 31. The suggestion is obvious: Buy before Nov. 1 and sell before May 1.

While the November to April period is referred to as the Best Six Months indicator, the second six months period from May 1 to Oct. 31 is known as the Worst Six Months, hence the old adage “Sell in May and Walk Away.” Both are loosely referred to as the “Halloween” indicator.

This year stands to present the Best Six Months indicator with a momentous challenge because the DJIA was already up more than 50%, or 3,272 points, from its March 9, 2009, bear-market bottom when October rolled around. Can the stock market keep advancing through April 30, 2010, or did the March-October surge steal its thunder?

Both indicators find support in the percentage change in the DJIA for each period. Since 1950, the DJIA advanced 45x versus 14 declines, with an average gain of 7.3% for the Best Six Months period. The Worst Six Months declined 35x versus 24 advances with an average gain of 1%. The Best Six Months featured 16 gains exceeding 15%.

However, like all seasonal indicators, the Best Six Months indicator is not flawless, having failed in its last two outings, falling victim to the ravages of the 2007 and 2008 bear market.

The 2007 to 2009 bear market is an example of how seasonal patterns can be overridden. The Best Six Months starting Nov. 1, 2007, with the DJIA at 13,930, began one month before the bull market that started in October 2002 topped out. Six months later, the DJIA was down 8.0%.

True to form, however, the ensuing “Worst Six Months,” May 1, 2008 to Oct. 31, 2008, proved to be just that—the worst—down 27.3%.

Once again, the six months starting Nov. 1, 2008 and ending April 30, 2009 was down 12.4%. While the stock market launched a steep recovery following its bear-market bottom on March 9, 2009, the damage done by the bear was too great to overcome, and it was not until early August that the DJIA recouped the losses sustained since Nov. 1, 2008.

Other exceptions to the rule over the years include the period associated with the April 1970 Cambodia invasion, the 1973 OPEC oil embargo and the Iraq War.

To illustrate its point, the Stock Trader’s Almanac compares an investment of $10,000 made between Nov. 1 and April 30 with the same for May 1 and Oct. 31, starting in 1950. The Best Six Months’ $10,000 investment grew to $464,305, whereas the Worst Six Months lost $1,968.

Jeffrey Hirsch, editor of the almanac, further refined the indicators, explaining that the results are vastly enhanced if transactions are confined to timing buys to coincide with the beginning of the Best Six Months period in postelection and midterm election years when the market tends to bottom out from sharp, or bear market, declines.

For the present, barring unforeseen adverse developments before April 30, 2010, Hirsch expects a repeat of the Best Six Months cycle starting in November 2009.

The industry groups that stand to perform best during this period are highlighted in the almanac’s study titled “Sector Index Seasonality,” which indicates that consumer and telecom stocks go into launch mode in September; banking, broker-dealers, computer technology, cyclical, health-care providers, materials, real estate, semiconductor and transports do so in October; and oil in December.

Hirsch sees a bear market developing in the summer of 2010, which would enable the Worst Six Months indicator to play out until the following fall in time for a timely buy before the beginning of the next Best Six Months cycle.

But the Best Six Months/Worst Six Months indicators have detractors, primarily from the academic community.

The academics have been arguing against market timing since Burton G. Malkiel’s book A Random Walk Down Wall Street was published in 1973, which essentially argued that the accuracy of forecasting moves in stock prices are as random as flipping a coin.

Professors of finance Andrew W. Lo (MIT Sloan School of Management) and Archie Craig MacKinlay (Wharton School at the University of Pennsylvania) countered Malkiel with their own book, A Non-Random Walk Down Wall Street, which concluded that the movement in stock prices is predictable.

A study by Ben Jacobsen, finance professor at New Zealand’s Massey University, and Sven Bouman of AEGON Asset Management studied stock-market returns for 37 countries between 1970 and 1998 and found statistically significant evidence to support the Best Six Months and Worst Six Months hypothesis, concluding a forecasting accuracy of 60% for its World Index, including France, Germany, Japan, Hong Kong, Singapore, Canada, Denmark, United Kingdom, Netherlands and the United States.

Before betting or selling the ranch, based on any seasonal or repetitive pattern in the stock market’s action, investors should be aware that none are flawless and that all must be taken in perspective.

It would be foolish to use any indicator by itself. Seasonal patterns are tools in one’s toolbox. No one tool is used for every job.

If a seasonal pattern suggests a buy or sell, that information should be used in conjunction with other indicators to improve the chances of doing the right thing. The Best Six Months/Worst Six Months indicators have enough historic significance to merit consideration, but as their behavior in the 2007 to 2009 bear market exhibited, they must be used along with other information.

Popular indicators will eventually be relegated to the graveyard. When too many people act in unison on an indicator’s signal, it loses its effectiveness.

Macro trends must be considered, as well. How significant is any data before the emergence of the more sophisticated institutional investor who started to dominate trading in the 1970s? Conclusions that are drawn from the averaging of data can be misleading, so it is also important for investors to peruse the raw data to detect distortions.

With the stock market, there are always a number of unpredictable balls in the air, any one of which can come crashing down unexpectedly to change the picture.

But there are enough technical analysts in the investment business with very impressive track records to rebut academics who claim otherwise.

The next time someone says no one can time the market, they are most likely saying “they” can’t time the market. It’s likely that they are the one’s who are selling at the lows and buying at the highs.