Almanac Investor Alert
Seasonal Shifts darn the Torpedoes 9/27/2007
Weekly Changes
DOW 13912.94 146.24 1.06%
S&P500 1531.38 12.63 0.83%
NASDAQ 2709.59 55.30 2.08%
September is apparently sick and tired of being the red-headed stepchild of the stock market. In this past issue we shared some of our recent research into the changing seasonal landscape with respect to October and the expanding “best months” of the year. However, September has managed to maintain its longtime consolation prize of “worst month of the year” or has it...
Sure September has taken some nasty hits, but most of them have come during major bear markets and September 2007 is about to register some of the best monthly gains in the last four years. To date the Dow is up 4.2%, S&P 3.9% and NASDAQ 4.4%. In the last 6 years we have also experienced the bulk of any seasonal weakness in the July-August period and not September.
September’s capacity as a reverse barometer disappeared years ago when we relegated that old indicator to the indicator graveyard. Now this dubious month tends to follow the trend, posting decent returns during bull markets and getting creamed ahead of or during bear markets.
The market is on pace to post the best September since 1998. This reinforces our revised forecast, made last issue, for further gains ahead of 15-25% from current levels15% for the Dow and S&P and 25% for NASDAQ.
Big tech has taken the lead and the NASDAQ 100 has already surpassed its July high. We expect the rest of the market to follow and march higher for the next 3-6 months with targets of Dow 16000, S&P 1760 and NAS 3400 during that timeframe. Once those levels are in site or breeched we will likely choose to take profits. Trouble still looms with the housing recession and weak dollar potentially pushing the U.S. economy into recession in 2008 or 2009. We may also want to get out of the way of any presidential election year mudslinging.
When our Seasonal MACD Buy Signal triggers, it will be full speed ahead. On the day that either the Dow, S&P 500 or NASDAQ MACD Buy Signals trigger we will add all the sector ETFs recommended last issue to the portfolio on that days closing price if their buy limits have not already been met. We will also be adding the “ultra” ETFs for the Dow, S&P 500, NASDAQ 100 and Russell 2000 to the portfolio at that time: Ultra Dow30 ProShares (DDM), Ultra S&P500 ProShares (SSO), Ultra QQQ ProShares (QLD), and Ultra Russell2000 ProShares (UWM).
The MACD Buy Indicators on the three main indices, as well as the Russell 2000, are all currently in “buy mode,” we are merely waiting for our October 1 seasonal cutoff date. We expect them to remain there through Monday, October 1, which would be the trigger. Be alert.
STANDARD TRADING GUIDELINES!
BUY LIMITS ARE GOOD TILL CANCELLED.
ALL STOPS EFFECTIVE ONLY WHEN THE STOCK CLOSES BELOW THE STOP PRICE.
ALWAYS SELL HALF ON A DOUBLE.
Please Trade Carefully.
Jeffrey A. Hirsch, Editor
J. Taylor Brown, Director of Research
