1 / 62

Jeffrey A. Hirsch President of the Hirsch Organization & Editor-in-Chief Stock Trader’s Almanac

Seasonal Sector Trading Tactics: Using Technical Timing Tools to Maximize Profits in Historical Seasonal Patterns. Jeffrey A. Hirsch President of the Hirsch Organization & Editor-in-Chief Stock Trader’s Almanac. Seasonalities Since 1966. Teamed up with Wiley. Focus on Content

stefan
Download Presentation

Jeffrey A. Hirsch President of the Hirsch Organization & Editor-in-Chief Stock Trader’s Almanac

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Seasonal Sector Trading Tactics:Using Technical Timing Tools toMaximize Profits in Historical Seasonal Patterns Jeffrey A. Hirsch President of the Hirsch Organization & Editor-in-Chief Stock Trader’s Almanac www.stocktradersalmanac.com

  2. Seasonalities Since 1966 www.stocktradersalmanac.com

  3. Teamed up with Wiley • Focus on Content • 43rd Stock Trader’s Almanac • 4th Commodity Trader’s Almanac • Almanac Investor: Web, Alerts, Blog, Twitter, LinkedIn • Brand New Revamped Site & e-Delivery • ETF Lab • Almanac Investor Book Series www.stocktradersalmanac.com

  4. Those who study market history are bound to profit from it. 4-Year Presidential Election Cycle Seasonality War & The Markets Recurring Patterns Current Trends Fundamentals Technicals Market Internals Economy Almanac Investing Philosophy www.stocktradersalmanac.com

  5. “Early in March (1960),Dr. Arthur F. Burns called on me…Burns’ conclusion was that unless somedecisive action was taken, and taken soon,we were heading for another economic dipwhich would hit its low point in October,just before the elections.” — Richard M. Nixon (37th U.S. President,Six Crises, 1913-1994) www.stocktradersalmanac.com

  6. 4-Year Election Cycle • 177-Year Saga • Gov’t Manipulates Economy • Prime Pump 3rd Year • Most gains in2nd half of term • Post & Midterm Bear Markets • Dirty Work Early * Based on annual close; Prior to 1886 based on Cowles and other indices; 12 Mixed Stocks, 10 Rails, 2 Industrials 1886-1889; 20 Mixed Stocks, 18 Rails, 2 Industrials 1890-1896; Railroad average 1897 (First industrial average published May 26, 1896) www.stocktradersalmanac.com

  7. Midterm Bottoms • No Bottom 1986 & 2006 • Cycle Is Back • Bottom Pickers Paradise • 1934 Dow –23% Feb-July • Worse for Democrats www.stocktradersalmanac.com

  8. Worse for Democrats • 18 Bull & Bears Since 1953 • Only 5 Bottoms in Pre- or Election • 8 Tops • Midterm Worst for Democrats • Dems Reclaim After Econ Duress www.stocktradersalmanac.com

  9. Bottom Pickers Paradise • Often During Crisis • 2009 Paid Right Away • May Pay Again in 2010 • Unmet Promises • 9 of 14 Bears Since 1961 Ended in Midterm Bottom Record Since 1961 1962 Kennedy (D) Bottoms in June and October. 1966 Johnson (D) Bottom in October. 1970 Nixon (R) Bottom in May. 1974 Nixon, Ford (R) December Dow bottom, S&P bottom in October. 1978 Carter (D) March bottom, despite October massacre later. 1982 Reagan (R) Bottom in August. 1986 Reagan (R) No bottom in 1985 or 1986. 1990 Bush (R) Bottom October 11 (Kuwaiti Invasion). 1994 Clinton (D) Bottom April 4 after 10% drop. 1998 Clinton (D) October 8 bottom (Asian currency crisis, hedge fund debacle) 2002 Bush, GW (R) October 9 bottom (Corp malfeasance, terrorism, Iraq) 2006 Bush, GW (R) No Bottom in 2006 (Iraq success, credit bubble) www.stocktradersalmanac.com

  10. Why A 50% Gain • Median = 50.6% • High = 89.6% • Low = 14.5% • 6 Jan Midterm Lows (25%) • 4 Oct Midterm Lows (16.7%) • Plus Oct Lows in 1962, 1974, 1978, 1998 • 9 Dec Pre-Elect Highs (37.5%) • 6 Highs Last Day (16.7%) www.stocktradersalmanac.com

  11. Financial Crises Impact • Special Feature in 2010 STA • Longer Recovery Time Likely, Already 2.5 Years • But 50% Move could give us New High in 2011 www.stocktradersalmanac.com

  12. Ten Worst Bear Markets • Same Page as Crises • Only WWII Averted Recession www.stocktradersalmanac.com

  13. Why Seasonality Exists • Agriculture made AugustBest Month 1900-1950 • Now we have the Summer Doldrums • Trading Volume Declines • End of Q3 • Week after Triple Witching Down • Yearend Influences • Q1 Earnings – Best 6 Months www.stocktradersalmanac.com

  14. 21-Year Seasonal Pattern www.stocktradersalmanac.com

  15. DJIA 1-Year Pattern www.stocktradersalmanac.com

  16. Best Six Months www.stocktradersalmanac.com

  17. Best Six Months + Timing www.stocktradersalmanac.com

  18. BSM+MACD+4-Year Cycle • Half the Trades • Triple Returns • Combine: • Best 6 Months • 4-Year Cycle • MACD Timing www.stocktradersalmanac.com

  19. Best Months Comparison www.stocktradersalmanac.com

  20. Year’s Best 3-Month Span www.stocktradersalmanac.com

  21. Santa Claus Rally • If Santa Claus Should Fail to CallBears May Come toBroad & Wall • First Signal • Watch Other Indicators • First 5 Days • January Barometer • December Low • Price & Volume Action & Internals www.stocktradersalmanac.com

  22. First 5 Days • Early Warning • Easily Skewed • 31 of 36 Ups • 12 of 23 Downs • Post-Election 10 of14 • 4 of 5 ups • 6 of 9 downs • Midterm Contrary • 7 of 15 & 1 of 8 Based on S&P 500 www.stocktradersalmanac.com

  23. January Barometer • Devised By Yale Hirsch in 1972 • As S&P Goes in January, So Goes Year • Only 6 Major Errors: 90.0%, 10 Flat: 73.3% • 10 out of 15 Midterm Years • Doubters Go Before 20th Amendment • 4 Odd Years Wrong: 9/11, Iraq 2003, 2005 Flat, 2009 • January 2008 was a heck of a Signal • 2009 Down Jan Signaled More Drop, 2010 So Far • Every Down Jan Since 1950: New or Cont. Bear,10% Correction or Flat Year www.stocktradersalmanac.com

  24. Down Januarys www.stocktradersalmanac.com

  25. January Barometer Vs. All www.stocktradersalmanac.com

  26. December Low Indicator www.stocktradersalmanac.com

  27. Down Jan & Dec Low Cross www.stocktradersalmanac.com

  28. Down Jan & Dec Low Crossw/ + Santa Rally & 1st 5 Days www.stocktradersalmanac.com

  29. Proving Grounds • Newsletter Feature • Expand • Dig Deeper • Explore New & Old • Debunk • Queries • Few Samples www.stocktradersalmanac.com

  30. Waterfall Declines • Dow 800 April 1975 • Down 12-28%In 2-4 Months • Back in 3-8 Months • DJIA 2007-20092 Waterfalls • -28% Oct-Nov 2008 • -27.5% Jan-Mar 2009 • In Feb 10500 By June • Then 9000 – 10500 Again www.stocktradersalmanac.com

  31. War & The Markets www.stocktradersalmanac.com

  32. 3 Peaks – Domed House www.stocktradersalmanac.com

  33. 2000-2009 Major 3 Peaks Dow Jones Industrials 1996-Jan 2010Monthly Closing High, Low & Close www.stocktradersalmanac.com

  34. Current Minor 3 Peaks Dow Jones Industrials – Three Peaks and a Domed House(3/2/2009-2/11/2010 – Daily High, Low & Close) www.stocktradersalmanac.com

  35. Four Horsemen of the Economy • The Dow • Consumer Confidence • Inflation • Unemployment Rate • Colt of the Economy • Initial Jobless Claims www.stocktradersalmanac.com

  36. Colt of the Economy www.stocktradersalmanac.com

  37. Went Bearish Late 2007 • 2007 Forecast Dow 14000 • Negative Seasonals • Called Recession & Bear in March 2008 • Four Horseman of Economy Collapse • 2008 Forecast Dow 10667 Breached www.stocktradersalmanac.com

  38. 2009 Bullish/2010 Cautious • Bull Market Underway • Advised Buy Below 8000 • Now Seasonal Buy Triggered • Dow 11000-12000 by Q1 2010 – Not Quite • Pullback Maybe Bear 20-30% in 2010 • Then 50% Rally - Maybe New Highs in 2011 • Dow 40000 by 2018 – 500% move www.stocktradersalmanac.com

  39. “If the market does not rally, as it should during bullish seasonal periods, it is a sign that other forces are strongerand that when the seasonal period ends those forces will really have their say.” — Edson Gould (Stock market analyst,Findings & Forecasts, 1902-1987) www.stocktradersalmanac.com

  40. Seasonality Questioned • “Sell in May” Panned – Yet Highly Talked about • Seasonality Not Perfect – But Undeniable • Best 6 Months Long Term Winner • 18.9% DJIA Last Worst 6 – Still Negative • Not Just Trading Tactic – Valuable Indicator • Late 2007/2008 – Bad Seasonality Got Us Out • One Of Many Tools In Trading Tactics • Seasonality Trumped – More Powerful Forces www.stocktradersalmanac.com

  41. 1973-74 Bad Seasonality • 1st Back-to-BackBSM Loss Since 1974 • Worst 6 in ’74 Nasty Followed By Big Move • Next 2 Years Strong • Worst 6 Bad in 2008Great in 2009 • Good IndicationFor Q4 2009-Q1 2010 • Not Just Seasonally • Concern 2010 WSM www.stocktradersalmanac.com

  42. Octoberphobia • Crashes in 1929 & 1987 • 554-Point Drop 10/27/97 • Back-to-Back Massacres 1978-1979 • 2007 Top • 2008 Biggest Monthly Point Drop & Worst Week • October Best Month To Buy www.stocktradersalmanac.com

  43. DJIA 1-Year Pattern www.stocktradersalmanac.com

  44. DJIA Best 6 Mos MACD Buy www.stocktradersalmanac.com

  45. Diamonds DJIA 30 (DIA) • Added 10/9 @98.69 www.stocktradersalmanac.com

  46. S&P 500 1-Year Pattern www.stocktradersalmanac.com

  47. SPDR S&P 500 (SPY) • Added 10/9 @107.26 www.stocktradersalmanac.com

  48. NASDAQ 1-Year Pattern www.stocktradersalmanac.com

  49. PowerShares QQQ (QQQQ) • Added 10/9 @42.48 www.stocktradersalmanac.com

  50. Russell 2000 www.stocktradersalmanac.com

More Related