A.I.M. Users Bulletin Board

[lrp42]

Hi Al,

That is a good subject to discuss about this time of year.

Historically most of the severe market declines have occurred during the summer months. A newsletter writer, Sy Harding, has developed a strategy around the so-called "favorable" and "unfavorable" months. Here is a link to his website.

http://www.streetsmartreport.com/index.html

I could be wrong, but I think he uses a technical indicator with the Dow, like the MACD, to determine the actual exit and entry dates instead of relying strictly on the calendar. In other words, when the calendar gets close to May he would use a technical indicator to decide when to exit the market. The same thing would be done when the market gets close to November for the entry date.

I believe that the Stock Traders Almanac folks do the same thing with a MACD technical indicator. Here is a link (I hope) which shows a table of their results using a MACD technical indicator with the so-called favorable and unfavorable seasons, instead of relying strictly on the calendar.

http://www.stocktradersalmanac.com/sta/research_tool_MACDEntryExitDOW.jsp

With respect to using that strategy this year, I would be a little leery of using that strategy myself. The reason is because the overall market has been less than stellar during the past six months. It could possibly take off and get some good results during these upcoming summer months. I think the same thing happened in 2003. Back then it wasn't doing so well during the winter months and then it took off during the summer. Someone sitting totally in cash lost out that year on a good bull run.

JMHO.

Best regards,

Ray