Friday, October 8, 2010

Happy Columbus Day?

While the stock market is open on Monday, banks, schools, government offices, and the bond market are closed. In past years with the bond market closed, the stock market has done quite well on Columbus Day. Of course the most famous Columbus Day rally was in 2008 when the market gained over 11% after having crashed the week before. This year circumstances are much different and the market has put in some nice gains this week. In the Subscriber Letter last year I showed research that suggested an up week prior to Columbus Day typically made for a good Columbus Day. Below I have updated some of that research.

I’ve circled some of the more impressive stats here. With more than 7 out 0f 10 trades profitable and winners nearly twice the size of losers risk/reward has been very favorable. It appears positive momentum from the prior week has shown a fairly strong tendency to follow through on Columbus Day. Below is the profit curve.

We see a fairly steady upslope here. Combined with the stats above I’d say Columbus Day does appear to provide a solid seasonal edge. Happy Columbus Day!


Auron said...

Columbus was responsable for a lot of deaths, some historians even go as far as to call him a genocidal maniac.

tamas said...

Interesting "sesonal" pattern. Great job!