Friday, February 17, 2012

The Weak Tendency Before President's Day

Friday is the last trading day before the President’s Day holiday. The day prior to many holidays we see a bullish tendency. This is NOT the case with Presidents Day. Over the last 20 years the Friday before President’s Day has been a very poor performer. I showed this last year in the 2/18/11 Subscriber Letter. I have updated the results in the table below.

Inclinations appear squarely bearish.


Daniel said...

"If the market does not rally as it should, during a bullish seasonal period, it is a sign that other forces are stronger. And that when the seasonal period ends, those underlying forces will really have their say." - Edson Gould

I assume the principle Mr. Gould was referring to should work in reverse. That is, this recent series of modestly favorable returns, during normally bleak stretches of mid to late February, ought to result in a major pop to new highs in the index averages the next time seasonal effects are again a tailwind...

Also, could not help but note, thanks to your recent Webinar, that today the QE buying power index was near a high for this month-- perhaps mitigating the clear downside probabilities of the above study.

Rest assured the small hedges it caused me to place, as a result of this cautionary factor, on a modest seasonal short position yielded an offset-gain far in excess of the inexpensive Webinar fee.

Value added is your middle name, Rob. Again thx.

Unknown said...

In my mind, there is no question that equity-markets are currently driven by cheap money of QE and LTRO. It is like a kind of sugar or crack that leads the markets into feverish excitement, but for which the comedown will be painfully difficult. Those who want to protect themselves would be wise to look for alternative investment options outside of equities.