It was a week of name calling, finger pointing and blame gaming in Washington. They even threw in a DC shootout for good measure. Even with all this adolescent behavior by our elected leaders, the market managed to hold the line for the most part.
Since Monday morning, the $SPX, believe it or not, managed to hold its 50 day moving average, even though it was tested practically everyday. You can take away what you want from this, but it tells me the market is concerned and confused, but not in outright panic mode, at least not yet. I also believe that everyday that goes by, our elected nimrods will figure it out.
In this new normal, indicators and seasonal patters have been turned upside down. Selling and May and going away didn’t work. If you did, you left opportunity and money on the table.
So it s time to get ready for what has been referred to as the “Halloween Indicator.” Over the past 50 years,the $SPX has gained an average of 6.6% between October and May. Between May 1 and Oct. 31, by contrast, its average gain has been just 0.8%.
You can do what you want with these stats, the May thingy didn’t hold true, but I think we go higher anyway, at least into year end. I guess economists and actuaries love these fun facts,but as a trader, you should be aware of it, but throw it away and focus on whats in front of your face.
Bottom line, we ripped during a period that should have been challenging (May -Oct.), we’ll see if the Halloween Indicator can hold true to form. I think it does.
Earnings start next week, led by the boring and mundane $AA (kicked out of $DJIA) and some of the big banks. It’s a great time to come by for a free trial and get my Sunday video with analysis and stock set ups for next week.
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