Hi Tuck,
Re: The Biotech's January-May Effect
I haven't been aware of that tendency or "rule" as you described it.But 5 Yrs. out of 6, (with the 2003 exception), looks like you may be up into something.<g>
However, I would try to find if there is any "hidden reason" for the trend. For instance, the "January Effect" is apparently due to the fact that small stocks usually suffer more at year's end & the "Santa Claus Rally" at people buying some blue chips after selling some poor performers for tax savings, etc.
Do you think that your "Bio Jan.-May Effect" could have anything to do with buying in anticipation of the ASCO meetings & selling afterwards ?
In today's section C of the WSJ on Justin Lahart's "Ahead of the Tape" column, he mentions the "November Effect", which according to Paul Bukowski of Hartford Investment Management, has been going on for the past 16 Yrs.<g> That one consists in that the stock winners have a tendency to perform worse than losers in November,( the difference on average being more than 3%.)
The question wether to bail or not I think has to be analyzed on an individual basis. I would base my decision on wether the stock brakes its uptrend or gives a "sell signal" on the chart. Or like Jesse used to say "Never argue with the tape".<g>
Now, let's look at the performance of some Biotechs in the last 2 Yrs. to see if we can see the Jan.-May Effect:
ABI's rally started in August in 2005 & the uptrend hasn't been broken as yet.<g>
bigcharts.marketwatch.com
ABMD was on a downtrend since January in 2005 when it had the downgap & the change on the trend was in January (with the Jan.Effect <g>) & the upmove lasted until Sep.
bigcharts.marketwatch.com
AAFX uptrend in 2005 lasted from Jan. until Jul.(when it had the downgap) & it started to get off from that downtrend last month
bigcharts.marketwatch.com
AGIX was on a downtrend in 2005from Jan. to May & has been just "trending" since then.<g>
bigcharts.marketwatch.com
ALKS started its uptrend in June in 2005& it lasted untilMarch 2006 It just started to try shaking off the downtrend last month.<g>
bigcharts.marketwatch.com
ALNY had an upgap in Sep. in 2005 with a short rally until March 2006 & started with another upmove last month.
bigcharts.marketwatch.com
DNA in 2005 didn't comply with the Jan-May-Effect, since it kept rising & this Yr it just kept trending lower.
bigcharts.marketwatch.com
VPHM's Rally in 2005 started in March & this Yr. the upmove started in August
bigcharts.marketwatch.com
The BTK started an uptrend in March in 2005 which lasted until Feb.2006 & a new uptrend started at the end of October which hasn't been broken as yet.
bigcharts.marketwatch.com
Of course, that's just a very small sample,not enough to try to discern any trend, but I was not able to observe the Jan-May Effect in any of them.
RAGL
Bernard
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