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Strategies & Market Trends : Guidance and Visibility -- Ignore unavailable to you. Want to Upgrade?

To: stevenallen who wrote (70319)	8/28/2002 12:48:34 PM
From: Joe Stocks	Read Replies (2) \| Respond to of 208838

Steve- This from this am's optioninvestor.com. >>>>>Bearish things can happen this time of year There's an old trader's axiom that says "September is when leaves and stocks tend to fall. For blue chips it's the worst month of all." How prophetic is that when the Stock Trader's Almanac points out that the last two days of August have been "murderous" five years in a row for the Dow Industrials (INDU), the quintessential "blue chip" average of 30 large cap stocks all considered to be bellwethers of various parts of the U.S. economy. This year is also a midterm election year, in which market history has shown, tends to be a little more bearish for the month of September. While September is the worst month for the Dow Industrials and S&P 500 Index, only two decent midterm Septembers have been experienced in the last ten years. Here's a quick look at three charts of the most recent midterm election years. I've taken data from August 1 to October 31 simply to give us some realization of trend and market action leading up to, during, and after the month of September. These are very simplistic charts with only the 50-day MA (intermediate term moving average) and 200-day MA (longer-term moving average) overlaid. Dow Industrials Chart - Aug 1 - Oct 31 1990 Chart = optioninvestor.com September of 1990 was a good midterm election month to be bearish the Dow Industrials as this major market average fell 6.1% for the month. Similar to September 1998 (shown further below), the Dow traded lower into the latter part of August, but rebounded just prior to September 1st. However, by months end, the Dow lost a rather impressive 162 points over the month, or roughly 6.1%. Dow Industrials Chart - Aug 1-Oct 31, 1994 Chart = optioninvestor.com September of 1994 was also a midterm election year, when the Dow Industrials and S&P 500 have tended to trade weaker. It is perhaps interesting to note that both the 50-day MA and 200-day MA were trending higher into the month of September. The Dow still lost about 70-points or 1.7%. Not too bad for a bull, but perhaps the "trend is your friend." Dow Industrials Chart - Aug 1 - Oct 31 1998 Chart = optioninvestor.com September of 1998 was actually a bullish September for the Dow Industrials as long as a trader wasn't bullish 3 or 4 sessions prior to the August 31st close. The Dow got "clocked" to the downside by 512 points on August 31 and had lost nearly 350 points in the two sessions prior. Perhaps the Dow was just a little "oversold" on a short-term basis. Maybe it wouldn't "hurt" to have just one bearish position on ahead of this weekend. What do you think the Dow Industrials will do this September, which is a midterm election year? My "historical" prediction is that the Dow Industrials (INDU) 8,824 will finish the month of September down 4% and close pretty close to the 8,430 level. Stocks that are Dow components that may well be "out performers" to the downside should my prediction come true are General Electric (NYSE:GE) $31.95, target $29.50, stop $33, Boeing (NYSE:BA) $37.03, stop $40.25, target $31.50 and Walt Disney (NYSE:DIS) $16, stop $18, target $12.50. I'm stopping at these three names for now as it is late on Tuesday evening as I write. However, each of these stocks currently has a "sell signal" associated with their point and figure charts, and relative strength versus the Dow Industrials is weak.