A.I.M. Users Bulletin Board

[fuzzymath]

‘January’ Effect: actually, Toofuzzy, it really has been a November-January effect, and my guess for why is the exact reason you state: knowledge that stocks rise in January (as people pump year-end bonuses and distributions into the market) has fueled buying in November and December. See my “Is There A January Effect” study: http://www.MathematicalAnalysis.com/JanEffct.html. From 1968 through 1998, 50% of the NYSE Composite’s gains came in November, December, and January.

As for telling you with CERTAINTY what will happen tomorrow? No, can’t do that! But, I can tell you that when the market gets into one of its strong downtrends like earlier this week, the average next day performance over the past 34 years has been another down day. Is that useful? I think it is if you’re doing short-term trading of market indices. But is it useful if you’re buying and selling using a longer-term strategy like AIM? I don’t know…

Want a prediction for Monday? A further rise. Historically, the market does have “follow-through” after a big gain like today’s, according to my analysis of the data since 1968…


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