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"Don't sell stocks on Monday or Friday" Almanac


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#1 Rogerdodger

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Posted 15 January 2010 - 02:29 PM

Stock Traders Almanac, guys.
I ought to see if we can't cut a deal with them for TT users...
I'll look into it.
Mark


I'm enjoying mine.
Here's a jewel I found on P 68: "Don't sell stocks on Monday or Friday."

The stats presented fit in to some other stuff I've read on the "6 day's of strength."

"Since 1989 Monday, Tuesday and Wednesday have gained 9194 DOW points.
Thursday and Friday combined have lost 3735 points."


Someone replied that the observation was stupid since Thursday & Friday are often down.
The point is to sell BEFORE the drop. ;)

As far as my statement: 'The stats presented fit in to some other stuff I've read on the "6 day's of strength"' note this from my blog:
Note: On 2/25/2006 Mike Burk commented:
"In the 1970's, Norman Fosback researched end of month, beginning of month seasonality. He found the last day of the previous month and first four days of the new month had unusually high returns. He would add the second to the last day of the ending month and the fifth day of the new month if they were not Mondays."

Caveats everywhere. <_<
I vaguely remember another statement from the Almanac which said something like: "down Friday,
weak Monday" but don't quote me.
Of course this MLK Monday the market's will be closed.

#2 Rogerdodger

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Posted 15 January 2010 - 02:39 PM

Ok. I found it. I was a little off about the down Friday-Monday stat.

It CAN BE A WARNING IF BOTH DAYS ARE DOWN.

P. 52 Stock Trader's Almanac 2010:

"Take advantage of down Friday/down Monday Warning"
...over the past 30 years...a down Friday followed by a down Monday is often an important market inflection point that exhibits a clearly negative bias...


They then include a chart of Nov 2007 to May 1, 2009.
Of course that time period would skew the results, or so it would seem.

So maybe in a bull market selling on Friday would simply be "profit taking" followed by buying the next week, whereas in a bear market you would see selling on any given day.

Edited by Rogerdodger, 15 January 2010 - 02:45 PM.


#3 mcleert

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Posted 15 January 2010 - 09:44 PM

Ok. I found it. I was a little off about the down Friday-Monday stat.

It CAN BE A WARNING IF BOTH DAYS ARE DOWN.

P. 52 Stock Trader's Almanac 2010:

"Take advantage of down Friday/down Monday Warning"
...over the past 30 years...a down Friday followed by a down Monday is often an important market inflection point that exhibits a clearly negative bias...


They then include a chart of Nov 2007 to May 1, 2009.
Of course that time period would skew the results, or so it would seem.

So maybe in a bull market selling on Friday would simply be "profit taking" followed by buying the next week, whereas in a bear market you would see selling on any given day.


So, buy Friday close and sell on Wednesday?

Edited by mcleert, 15 January 2010 - 09:49 PM.


#4 voltaire

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Posted 15 January 2010 - 11:24 PM

Ok. I found it. I was a little off about the down Friday-Monday stat.

It CAN BE A WARNING IF BOTH DAYS ARE DOWN.

P. 52 Stock Trader's Almanac 2010:

"Take advantage of down Friday/down Monday Warning"
...over the past 30 years...a down Friday followed by a down Monday is often an important market inflection point that exhibits a clearly negative bias...


They then include a chart of Nov 2007 to May 1, 2009.
Of course that time period would skew the results, or so it would seem.

So maybe in a bull market selling on Friday would simply be "profit taking" followed by buying the next week, whereas in a bear market you would see selling on any given day.


So, buy Friday close and sell on Wednesday?



Dodger

Sounds impressive until you consider we are talking about 1,000 weeks. 20X50.

So MTW up 9 pts and TF down 4 on average.

Hardly enough to change your overall trading plan.

#5 Rogerdodger

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Posted 16 January 2010 - 11:26 AM

Hardly enough to change your overall trading plan.


I agree. It is an interesting bias however.
This fact helps that bias:
"Jan expiration week Dow down big 9 of last 12.
January Expiration Day, Dow Down down 10 of the last 12 with big losses.
Off 2% in 06, 1.3% in 03 and 1.6% in 1999, 0.94% in 2010."


And I wonder how much of the data is influenced by statistical outliers?

Black Thursday on October 24,1929 which started the Stock Market Crash of 1929 and the Black Monday decline of October 19,1987,the largest one-day percentage decline in stock market history are NOT included in the 20 year data set beginning in 1989.

Edited by Rogerdodger, 16 January 2010 - 11:32 AM.