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Saturday, December 19, 2009 8:50:34 PM
Amateur Investors Weekend Market Analysis (12/19/09)
http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_19_09.htm
Many are wondering how the market will perform in 2010? The chart below is a Yearly Performance Chart for the Dow involving those years that end in a "0". As you can see overall there have been more down years (7) than up years (4) by nearly a 2 to 1 ratio. Thus it will be interesting to see how 2010 turns out.
Meanwhile as I have mentioned the past two weeks since 1896 the Dow has never had three consecutive years in a row in which it has a negative return in the month of December.
Furthermore if we expand this into the month of January the Dow has had only one occurrence in which it had more than 2 years in a row with a negative return which was from the late 1930's into the early 1940's. However in all of the other cases, of which there were 8 occurrences, each was followed by a positive monthly return for January in the 3rd year. The reason I bring this up is that the past two years the month of January has had a negative return (-4.6% in 2008 and -8.8% in 2009). Thus based on past history the odds of a significant sell off this January look to be rather low.
As far as the major averages all of them are still exhibiting Wave C of a corrective ABC type pattern after completing a 5 Wave pattern to the downside in March. The Dow has stalled out just above its longer term 50% Retracement Level calculated from the October 2007 high to the March low. If it is able to move higher into January I would look for resistance possibly where the Dow found brief support at in July of 2008 near 10800 (point D).
As for the Nasdaq it's attempting to rally back to its longer term 61.8% Retracemwent Level near 2252 which should act as a significant resistance area.
Finally the S&P 500 has stalled out just below its longer term 50% Retracement Level (blue line) calculated from the October 2007 high to the March low at 1121. If the S&P 500 is able to rise above 1121 then the next area of resistance would be at 1158 if the length of Wave C = the length of Wave A.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to the following products.
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's and SPY's.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account.
3. The "End of Month Strategy". This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy.
http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_19_09.htm
Many are wondering how the market will perform in 2010? The chart below is a Yearly Performance Chart for the Dow involving those years that end in a "0". As you can see overall there have been more down years (7) than up years (4) by nearly a 2 to 1 ratio. Thus it will be interesting to see how 2010 turns out.
Meanwhile as I have mentioned the past two weeks since 1896 the Dow has never had three consecutive years in a row in which it has a negative return in the month of December.
Furthermore if we expand this into the month of January the Dow has had only one occurrence in which it had more than 2 years in a row with a negative return which was from the late 1930's into the early 1940's. However in all of the other cases, of which there were 8 occurrences, each was followed by a positive monthly return for January in the 3rd year. The reason I bring this up is that the past two years the month of January has had a negative return (-4.6% in 2008 and -8.8% in 2009). Thus based on past history the odds of a significant sell off this January look to be rather low.
As far as the major averages all of them are still exhibiting Wave C of a corrective ABC type pattern after completing a 5 Wave pattern to the downside in March. The Dow has stalled out just above its longer term 50% Retracement Level calculated from the October 2007 high to the March low. If it is able to move higher into January I would look for resistance possibly where the Dow found brief support at in July of 2008 near 10800 (point D).
As for the Nasdaq it's attempting to rally back to its longer term 61.8% Retracemwent Level near 2252 which should act as a significant resistance area.
Finally the S&P 500 has stalled out just below its longer term 50% Retracement Level (blue line) calculated from the October 2007 high to the March low at 1121. If the S&P 500 is able to rise above 1121 then the next area of resistance would be at 1158 if the length of Wave C = the length of Wave A.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to the following products.
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's and SPY's.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account.
3. The "End of Month Strategy". This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy.
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