Web Statistics stock market bottom fishing

Sunday, 25 October 2015

stock market bottom fishing

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Stock Market Bottom Fishing ?






stock market bottom fishing ?

Is now a good time to be a good time to fish for a stock market bottom?

Odds are that the Halloween Indicator will be especially good for the stock market this year. We are only days away from Halloween, but in looking around the interwebs, we also founds some very very intersting charts for you to gaze apon. One of these fancy charts is below. Take a peek!.......

What we want to do before we go on our usual rant, LOL, is show you one very very powerful chart. Here below is a 30 year cycle chart of the dow jones. As you can see, circled on the chart below, in pre-election year [which is this year 2015] you normally see the stock market bottom out in or around OCTOBER of that year, and then you see a multi-year rally soon after wards. Have a look at the chart below. If that is what is happening here, things are slowly getting very very interesting. 

stock market pre-election cycles.
stock market pre-election cycles.


That’s encouraging news, since the Halloween Indicator WE TALKED ABOUT HERE already carries decent odds of success. But lets not jump the gun too quickly, hey!

But when the stock market is riding a wave of momentum into Halloween — as it most definitely is this year, including another 200+ point rally in the Dow Jones Industrial Average DJIA, +0.90%  on Thursday — it might get exciting for you, because the odds start becoming even better.

Let us delve deeper again, as we have talked about this before, but basically in layman's terms, the Halloween Indicator refers to the stock market’s seasonal tendency to produce its best returns between Halloween and May Day ( “winter” months). This indicator is also known to be as that age old saying from the big wigs on wall street “Sell in May and Go Away,” since those who mechanically follow it go to cash during the “summer” months (from May Day until the subsequent Halloween).



Notice from our "timing the nasdaq" chart above that the Indicator worked like a charm over the last year. Over the seasonally-favorable six-month period that began on Halloween 2014, the market gained 2.6% — versus a loss of 2.6% in the unfavorable summer months that began last May Day.

I was in conversation with a very smart trader over the weekend. This guy has made millions from trading the market. He again bought up the point that if you're investing for retirement, you should never ever, focus on the Fed and short-term rate hikes. You must always have a business plan, & Stick to your long-term investment goals. Then after that has been taken care of, you have to keep your eye out for sudden inflation and keep an eye on asset allocation during market cycles. As that is where investors will get caught up from time to time. Its the difference between being an an average investor and someone who makes a killing on the stock market consistently.

What’s particularly noteworthy about this seasonal tendency is that despite many analysts being skeptical about it, and saying brush these sort of charts off. The proof is in the pudding, as they say. Its been sticking like glues. So it might help your investing in the next 12 months. If anything, in fact, it’s been stronger over the last 15 years than it has ever been in the last 50 years. So its worth sitting up and taking notice of in the end of 2015. In the early 1990s that academic research into the these cycles and indicators were not really circulating widely, but now is pretty much a known fact, among smarter types of investors. Maybe its sort of one of those self fulfilling prophecy type events. We do not know, but we would be skeptical about that as well. When you are investing in the market, you do not know what happens today, tomorrow and into next week for that matter, but its always good to have some sort of a road map to follow. Any sort you can get your hand on, that has proven the test of time. This is one of those rare types of indicators, and its worth mentioning to our readers.

Also, it could proved to be even more powerful this year....Why?

SIMPLE....

These already-impressive statistical odds become even better when the stock market is able to buck the seasonal odds and eke out a gain over the September-October period — the last two months of the seasonally unfavorable summer period. That’s exactly what’s happened this year, with the Dow currently 5% higher than where it stood at the end of August.

For example, this research data has proven that : going back even to the late 1800s, the Dow produced an average Halloween-through-May-Day gain of 4.0% whenever the market was a loser over the two months prior to Halloween. And that is sort of the situation we have on our hands right now. So its another reason why we had to bring this to your attention going into NOVEMBER! This is the sort of information that could give you a clear advantage to other investors out there, who are have been getting slaughtered from the market volatility in recent times.

When it was a gainer, in contrast, the Dow’s subsequent Halloween-through-May-Day gain was 6.8%. This difference of 2.8 percentage points is significant at the 95% confidence level that statisticians often use to determine if a pattern is genuine.

Note that what we are saying is that a bear market won’t occur. In fact there are some charts that do alarm us, right now. And you have to remember the stock market rally over the last few weeks, has been pretty historical.  But if the future is like the past, the worst of any upcoming bear market will wait until after May Day of 2016 — since the bulk of market damage during past bear markets has occurred during the summer months. And that is also according to the indicator and cycle itself. Which has proven very accurate in bear markets also, just you know.

During the 2007-2009 bear market, for example, losses during the summer months were twice as big as those during the winter months. And again it continued to follow the cycles, and indicator we are making reference too. One thing to note is that they will not all repeat perfectly, like some analysts out there are claiming. NO! Its just another tool you should wear around your armory belt as a trader. The more tools you have, the better you are prepared for the trading year calendar. Remember, after all this game is all about timing, and getting in and out at the right time. If you don't you can lose your shirt pretty quickly no doubt. But all this could mean we are about to see some really nice opportunities rare their pretty little head in the coming 8 or so weeks. Time will tell.


All in all, we have seen lots of people calling for a crash, and the horrific end to the bull market. But what you have to remember that right now, the FED is for now keeping rates at record lows, the economy is still getting better, and the company reports that have been released in the last week have not been too horrific. We have more companies reports in the next week too, but this market is like might be in a situation where too many people got too bearish, too fast!!! So of that is anything to go by, these same people might be forced out soon, which will not only create alot of interest, but FRESH buying interest, which could turn the market round, and set us up on the next leg higher!

I mean, that is a real possibility here, we have lots of company reports being released in the coming week, so we will have to see about that. Nothing is set in stone. We could drop back to 1800 on the SPX by next Friday, but we do not buy into that sort of situation playing out, when you look at the chart above. Plus the fact that funds that closed out some of the positions back in MAY 2015, are now sniffing around and looking for safe areas to put their money back to work. And trust me when I say, there is definitely vehicles out there that represent safety and value. 



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