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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank
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To: Jenna who wrote (4389)12/18/1997 11:09:00 PM
From: LastShadow  Read Replies (1) of 120523
 
Pre-Holiday Effect:

There are 9 holidays for which the exchanges traditionally close trading. Research based on 600 holiday closings since 1928, and an analysis of the S&P 500 Index daily price action has determined a common pattern for the two days preceeding the holiday. No one knows why this occurs, but we suspect that traders are offloading stocks so as not to get caught with bad news that might occur over the long weekends. In general, stocks prices have increased during and after those two days, and the strategy would be to buy just prior to the two days and sell immediately after. In fact, buying and selling just before and after the Holidays and the month-end periods is about 12,000% more profitable over the last 50 years than just holding the S&P 500 Index. The Christmas Holiday is slightly different, however, in that the better day to go long is the 23rd of December, as market prices tend to drop on that day. The historical growth is listed below:

Christmas

Dec 23: -7.1%
Dec 24: +15.2%

New Years

Dec 30: +31.1%
Dec 31: +19.6%

In addition, we have the January Effect closing in on us. In a discussion I had with DollrBill and AlienTech recently in the rttrader chat room, we discussed some of that and the first quarter growth sectors. Before year end I will post my thoughts on that and the quarterly look at Mutual Funds.

lastshadow
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