Almanac Investor Alert
No Saints Day 11/1/2007
Weekly Changes
DOW 13567.87 -104.05 -0.76%
S&P500 1508.44 -5.96 -0.39%
NASDAQ 2794.83 43.97 1.60%
The market took its second big beating in less than two weeks with the losses nearly matching those of Friday, October 19. NASDAQ and the techs have faired a bit better but, the Dow and S&P 500 have been pushed back near the levels on the 19th. This has been the story of the rally since August 16. Tech has performed best and lead the market’s rally. The broad market has been weighed down by housing, financials and high oil prices.
Today’s news from Exxon, Citigroup and others as well as the second take on yesterday’s Fed 25bp rate cut has trumped the otherwise favorable seasonality for the first trading day of November. This is also the first day of the Best Six Months and the Dow has been up 23 of the last 29 years on this day. Though the last two years the day has been down, November’s first trading day is rarely down as dramatically as it was today. The Dow posted its fourth worst first trading day of November since 1901, closing down 2.6%.
We took a look at the other ten worst November openings, what happened the next day and what if anything was going on at the time. Listed is the first trading day of November date, followed by the Dow’s close, percent change and the percent change the following trading day.
11/4/1929, 257.68, –5.79%, –9.92%
11/1/1917, 71.41, –4.15%, +1.55%
11/1/1932, 60.22, –2.71%, –2.81%
11/1/1937, 135.94, –1.61%, –4.27%
11/1/1971, 825.86, –1.57%, +0.26%
11/1/1957, 434.71 –1.44%, –0.15%
11/1/1967, 867.08, –1.44%, –0.26%
11/1/1977, 806.91 –1.40%, –0.75%
11/3/1975, 825.72, –1.23%, +0.53%
11/1/1994, 3863.37, –1.15%, –0.68%
As you can see, this level of negative action on the first day of November has been followed mostly by losses the next day and fallen during some rather interesting times. In 1929 this was just after the crash and the bear market bottomed on 11/23/29 @ Dow 198.69. In 1917 WWI and the Bolshevik Revolution were in full swing and Balfour Declaration was just about to be signed: 12/19/17 bear bottom @ Dow 65.95. In 1932 the Depression still gripped the world and the final leg of the bear was in mid-stride: 2/27/33 bear bottom @ Dow 50.16. In 1937 the second wave of the ’37 Crash was kicking in as WWII was stirring with the Spanish Civil War, Sino-Japanese War and Hitler’s power brewing in Germany: 3/31/38 bear bottom @ Dow 98.95. In 1971 we were still suffering from trouble in Vietnam as well as dollar and gold problems: 11/23/71 bear bottom @ Dow 797.97. In 1957 Cold War machinations were stirring in the fall and Sputnik 2 was launched: 10/22/57 bear bottom @ Dow 419.79. In 1967 there was no bear in sight but trouble in Vietnam and riots in Hong Kong may have spooked The Street. In 1977 the market was entering the last leg of a bear market: 2/28/78 bear bottom @ Dow 742.12. In 1975 an announcement about Mattel’s fabricated press releases and financial info likely caused the day-one drop. Finally in 1994, the market may have been suffering from the recent Russian ruble collapse and Iraqi hostilities towards Kuwait.
Thanks to our good friend Dan Turov at Turov on Timing for posing such an excellent and timely question.
None of our remaining long ETF positions were stopped out today and this may be the solid helping of fear the market needs to clear the decks and move higher. Perhaps this is the markets way of scaring the Fed into a more accommodative stance.
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
