We are getting close to April 3rd the first
trading day of the new month.
In the following heat map you will see that the first half of April does not have any orange or red days, only yellow and green. The first TD of April according to the work of Jeffrey Hirsch, see below, produced the 2nd best first TD of the month after May.
This also fits with the potential Picasso Cycle high forecast of April 13th. See the posting on March 27,2017.
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| Courtesy of @RyanDetrick |
The following post was last made on February 1st, so now is a good time for a refresher
on this subject.
* Take a look at the 3rd chart below by JEFFREY A. HIRSCH, editor-in-chief of the Stock Trader's Almanac.
The data shows that the month of May has had the largest total DJIA points gained on the first day of the month from September 1997 to December 2012.
*** April came in 2nd place !!!
Browsing the Fidelity Customer Service Learning Center can be very useful
Monthly trading patterns: Human behavior shapes market activity
By
Jeffrey A. Hirsch
www.stocktradersalmanac.com
Click on the following link for the full article
http://bit.ly/1HbpM7W
The following is an excerpt from the article
Monthly cash inflows into S&P stocks
For many years, the last trading day of the month plus the
first four of the following month were the best market days of the
month. This pattern is shown in Figure 1, where from 1953-1981 the
S&P 500 shows these five consecutive trading days posting gains a
much larger percentage of the time than the other 16 trading days of the
average month. The rationale was that individuals and institutions
tended to operate similarly, causing a massive flow of cash into stocks
near beginnings of months.
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| Courtesy of Jeffrey A. Hirsch |
“Front-running” traders took advantage of this phenomenon,
drastically altering the previous pattern. Figure 2, which follows the
S&P 500 from 1982 onward, shows the trading shift caused by these
“anticipators” to the last three trading days of the month plus the
first two. Another astonishing development shows the ninth, tenth, and
eleventh trading days rising strongly as well. One possible explanation
is that this mid-month bulge is caused by the enormous growth of 401(k)
retirement plans (participants’ salaries are usually paid twice
monthly).
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| Courtesy of Jeffrey A. Hirsch |
------- > > > DJIA gains more on first day than all other days
Over the last 15 1/4 years the Dow Jones Industrial Average has
gained more points on the first trading days of all months than all
other days combined. While the Dow has gained 5481.72 points between
September 2, 1997 (7622.42) and December 31, 2012 (13104.14), 5323.19
points were gained on the first trading days of these 184 months. The
remaining 3674 trading days combined gained just 158.53 points during
the period. This averages out to gains of 28.93 points on first days, in
contrast to only 0.04 points on all others. See Table 1.
Note that September 1997 through October 2000 racked up a total
gain of 2632.39 Dow points on the first trading days of these 38 months
(winners except for seven occasions). But between November 2000 and
September 2002, when the 2000-2002 bear markets did the bulk of their
damage, frightened investors switched from pouring money into the market
on that day to pulling it out in fourteen months out of twenty-three.
This netted a 404.80 Dow point loss. The 2007-2009 bear market lopped
off 964.14 Dow points on first days in 17 months from November 2007 to
March 2009. First days had their worst year in 2011, declining seven
times for a total loss of 644.45 Dow points.
First days of June have performed worst. Triple digit declines
in four of the last five years have resulted in the worst net loss.
August is the second net loser. In rising market trends, first days
perform much better as institutions are likely anticipating strong
performance at each month’s outset. S&P 500 first days track the
Dow’s pattern closely but NASDAQ first days are not as strong with
weakness in April, August, and October.
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| Courtesy of Jeffrey A. Hirsch |
For more information contact
JEFFREY A. HIRSCH, editor-in-chief of the Stock Trader's Almanac and Almanac Investor newsletter, and the author of The Little Book of Stock Market Cycles (Wiley, 2012).
www.stocktradersalmanac.com
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This
has been posted for Educational Purposes Only. Do your own work and
consult with Professionals before making any investment decisions.
Past performance is not indicative of future results
