StreetSmartPost

Saturday, April 19, 12 noon.

The market has been following its short-term pattern tendencies to an unusually precise degree.

The ‘monthly strength period’ and end-of-quarter ‘window dressing’ came and went on schedule, and produced their typical rally.

Then the market responded to the monthly jobs report in its typical fashion, a triple-digit one to three-day move by the Dow, this time to the downside.

The second half of the jobs pattern is that the kneejerk reaction to the jobs report is usually reversed over the subsequent few days. That certainly happened with the 191 point two-day rally.

The next pattern was that the week before the month’s options expirations week, which was two weeks ago, tends to be negative. And the market did plunge sharply, the S&P 500 down 2.7% for the week.

The next historical pattern was that the week of the expirations, which this week was, tends to be positive. And it was, with the S&P 500 gaining back 2.7% this week.

Can it continue?

If so, the next pattern is that the week after a positive options expirations week, which will be next week, tends to be negative.

However, it is unusual for the market to follow its short-term patterns this precisely for so long (or short-term traders would have it easy). So we shall see.

Mark Hulbert on ‘Sell in May’ seasonal timing:

Excerpts from this week’s article on MarketWatch by Mark Hulbert, editor of Hulbert Financial Digest: Link to full article: Hulbert- Sell in April and go away- 

“To be sure, the seasonal tendency doesn’t work every year. The summer months in 2013 were one such exception, when the Dow rose 4.8% between May Day and Halloween. But it works enough of the time to be significant at the 95% confidence level that statisticians often use to decide whether a pattern is more than just a fluke.

Another impressive statistical feat achieved by the Halloween Indicator [Sell in May and Go Away]: It’s become even more pronounced in recent decades. That’s noteworthy, because the more usual pattern is for tendencies to stop working once they are discovered and lots of investors begin to follow them.

But not in this case. Ben Jacobsen, a finance professor at Massey University in New Zealand, says he found an article as long ago as 1935 in the Financial Times in which the “Sell in May” pattern is referred to as something that was already well-known and followed.

Even though the pattern nearly 80 years ago already had a solid historical foundation, Jacobsen says that, since then, the difference between the average returns in winter and summer has become even bigger.

Given this impressive record, the odds would seem to be quite low of being able to do even better . . . . . . . . but over the past 12 years, one of the two market-timing services that I monitor that regularly second-guess the “Sell in May and Go Away” system — Sy Harding’s Street Smart Report, edited by Sy Harding — has significantly increased that seasonal pattern’s performance. While the other one — Almanac Investor Newsletter, edited by Jeffrey Hirsch — has not improved on the Halloween Indicator, it at least has still beaten a buy-and-hold strategy.”

To read my weekend newspaper column click here:   There is More to the Economic Slowdown Than Just Weather

Subscribers to Street Smart Report:

In addition to the long-term, intermediate-term, and short-term charts and signals in the ‘premium content’ area of this blog, the Mid-Week Markets update from Wednesday is in your secure area of the Street Smart Report website The next issue of the newsletter will be out on Wednesday.

Non-Subscribers:

Check out our new bull market/bear market indicator (BBMI) by clicking here: Market Timing Strategy !

U.S. market’s last session for week was mixed.

The U.S. market closed mixed Thursday. The Dow was up 40 points in the morning but sold off in the afternoon to close down 16 points. Volume was quite low for an options expirations day, with 0.8 billion shares traded on the NYSE.

The Dow closed down 16 points, or 0.1%. The S&P 500 closed up 0.1%. The NYSE Composite closed up 0.3%. The Nasdaq closed up 0.2%. The Nasdaq 100 closed up 0.1%. The Russell 2000 closed up 0.5%. The DJ Transportation Avg. closed up 0.6%. The DJ Utilities Avg closed down 1.1%.

Gold closed down $8 an ounce to $1,296 an ounce.

The U.S. dollar etf UUP closed unchanged.

The 20-yr bond etf TLT closed down 1.1%.

Asian markets closed up in their last session of the week.

Asian markets closed up Thursday night (Friday in the U.S.). 

Among individual markets Thursday night:

Australia closed up 0.6%. China closed down 0.1%. Hong Kong closed up 0.3%. India closed up 1.6%. Indonesia closed up 0.5%. Japan closed up 0.7%. Malaysia closed up 0.1%. New Zealand closed up 0.3%. South Korea closed up 0.6%. Singapore closed up 0.1%. Taiwan closed up 0.3%. Thailand closed up 0.1%.

European markets closed up yesterday:

The Europe Dow closed up 0.6%.

Among individual countries:

The London FTSE closed up 0.6%. The German DAX closed up 1.0%. France’s CAC closed up 0.6%. Belgium closed up 0.4%. Greece closed up 2.5%. Ireland closed down 0.3%. Italy closed up 0.4%. The Netherlands closed up 0.2%. Norway closed up 0.9%. Portugal closed up 0.9%. Spain closed up 0.2%. Switzerland closed up 0.65%.

Global markets for the week. 

In the U.S. the Dow, S&P 500, and NYSE Composite had their biggest weekly gain in several years, following their worst week in several years, putting them right where they were two weeks ago. The Nasdaq and Russell 2000 only partially recovered from the previous week’s loss.

Major markets in Europe recovered less than half of their losses of the previous week.

Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

In the premium content area this morning: The U.S. stock market, gold, and bonds, signals (long-term, intermediate-term, and short-term), and analysis of each.

Thursday, April 17, 9:25 a.m.

Those selling stocks, bonds, mutual funds and related investment products have long recognized that busy part-time individual investors want and need things kept simple. Quick ‘sound bites’, brief stock tips, short and entertaining presentations.

So the popularity of slogans and myths that avoid complex explanations and analysis, yet seemingly get an important point across, is therefore understandable.

Unfortunately, far too many mislead and steer investors away from the truth.

As finance Professor Richard Thaler put it in his classic ‘Advances in Behavioral Finance’, “Wall Street needs investors who are irrational and woefully uninformed.”

Getting through the sound bites and marketing gimmicks to arrive at the truth can be quite difficult. That’s particularly true in these days when the line between truth, and simple repetition of unsupported myths, is blurred by the glut of self-appointed bloggers not required to engage in fact-checking before publishing. A couple of impressive sound bites picked up elsewhere and embellished is all that’s needed to convey financial knowledge.

Here are some of the misleading myths and slogans of Wall Street aimed at convincing investors to buy what they are sold, and simply hold through whatever comes along (no mention that it can involve periodic 30% to 50% losses, and seeing portfolios underwater for 15 or 20 years):

· The myth that ‘good stocks’ or ‘defensive stocks’ will hold up in market declines.

· The fantasy that ‘buy, hold – and pray’ is the way to go for retail investors.

· The illusion that professionals, insiders, and institutions are buy and hold investors.

· The lie that public investors aren’t smart enough to engage in asset allocation in a timely manner that will manage risk and keep profits.

· The market always comes back.

· The market cannot be timed.

· It’s not about ‘timing the market’, but ‘time in the market’.

· Technical analysis of markets is mumbo jumbo.

· Bull markets always climb a ‘wall of worry’.

This is the first of a series. I’ll have the truth, including the historical statistics about those myths and slogans, in the next few blog posts.  

To read my last weekend’s newspaper column click here: The Market is Too Dependent on Hopes That Await Evidence This week’s column will be published late today or Saturday.

Subscribers to Street Smart Report:

An in-depth Markets Update is in your secure area of the Street Smart Report website from yesterday. More Stock market, gold, and bonds, short-term, intermediate-term and long-term in your ‘premium content’ area of this blog and the next blog on Saturday. And the next issue of the newsletter will be out next Wednesday.

Non-Subscribers:

We updated the sample issue of our newsletter on Monday to a more recent issue you may find interesting. Click here to access it. Sample issue of Street Smart Report newsletter

Yesterday in the U.S. Market.

Another positive day, and triple-digit gain, as the short-term pattern that called for this be a positive week has worked out so far.  Volume was again almost 0.7 billion shares tradeto d on the NYSE.

The Dow closed up 162 points, or 1.0%. The S&P 500 closed up 1.0%. The NYSE Composite closed up 1.0%. The Nasdaq closed up 1.3%. The Nasdaq 100 closed up 1.3%. The Russell 2000 closed up 1.1%. The DJ Transportation Avg. closed up 1.7%. The DJ Utilities Avg closed up 0.8%.

Gold closed up $2 an ounce at $1,303.

The U.S. dollar etf UUP closed up 0.1%.

The 20-yr bond etf TLT closed up 0.1%.

European Markets also closed up strongly yesterday.

The Europe Dow closed up 1.4%.

Among individual countries:

The London FTSE closed up 0.7%. The German DAX closed up 1.6%. France’s CAC closed up 1.4%. Belgium closed up 1.7%. Denmark closed up 1.9%. Finland closed up 1.1%. Greece close up 2.6%. Ireland closed up 1.6%. Italy closed up 3.4%. Netherlands closed up 0.9%. Norway closed up 0.9%. Portugal closed up 2.2%. Spain closed up 1.6%. Switzerland closed up 0.5%.

Asian Markets closed up some last night.

The Asia Dow closed up 0.3%.

Australia closed up 0.6%. China closed down 0.3%. Hong Kong closed up 0.3%. India closed up 1.6%. Indonesia closed up 0.5%. Japan closed unchanged. Malaysia closed up 0.1%. New Zealand closed up 0.3%. South Korea closed down 0.1%. Singapore closed up 0.1%. Taiwan closed up 0.2%. Thailand closed up 0.5%.

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In the premium content area this morning: The next short-term market patterns. And charts and signals for short-term, intermediate-term and long-term on the U.S. stock market, gold, and bonds.