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In a message dated 11/20/98 10:11:59 AM Mountain Standard Time, monica@xxxxxxx
writes:
<< Historically, how does the market act on Thanksgiving week? I often buy
equity options on Fridays if/when the market drops and then sell on Mon. or
Tues. But next week is a short week and I don't know what to expect. Any
ideas?
Thanks,
Monica >>
Martin Zweig devotes a chapter in his book "Winning on Wall Street" to
seasonal indicators and much of that chapter deals with price action around
holidays. According to Mr. Zweig, during 33 years of study, on the day
before Thanksgiving, the market has gone up 27 days, down 4 days and remained
unchanged on two days. Further, the market was up 30 days, down 2 days and
unchanged on one day on the day after Thanksgiving. Mr. Zweig atributes these
effects to the optimism engendered by holidays. He also found a similar,
though less pronounced, effect due to the optimism engendered by weekends.
Mr. Zweig's book is pretty good overall and I can recommend it to beginers and
advanced beginers. In addition to discussing seasonal effects, he defines
some good interest rate based and market sentiment based indicators for
identifying changes in the major trend. He is one of the few popular
investment guru's that advocates market timing rather than preaching buy and
hold. His studies are pretty well documented in terms of the returns
achievable with his methods as opposed to returns achieved with buy and hold.
Dan
Pocatello, ID USA
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