So far we have a good week going. What's next?
An interesting, volatile couple of days are behind us.
Yesterday the Dow and the Nasdaq were down, but the S&P 500, small
caps, international stocks, and bonds were positive. Oil is
just off record highs and gasoline is off the charts lately as you
know. How will the market continue to digest this information?
The rising energy prices are not great for the economy but it may be
enough to get Greenspan to stop raising interest rates. The
market seems to be trying to figure out what to make of this.
That will play out in the weeks and months ahead. So what
should we expect in the short term? The shortest term
indicators are now actually overbought, believe it or not. A
positive day again Friday could set up some profit taking next week.
I had mentioned that the day prior to Labor Day weekend is very
strong historically being up over 70% of the time between 1950 and
2004. I did a little more research and noticed this trend is
not quite as strong recently.
I went back to 1994 and grabbed some rough numbers that represent
points gained or lost by the S&P 500 (not percentage gained or lost)
for the Friday before Labor Day weekend and the Tuesday after.
| Year |
Friday |
Tuesday |
Wk
Before |
Wk After |
| 2004 |
-4 |
+8 |
+6 |
+10 |
| 2003 |
+5 |
+14 |
+15 |
+13 |
| 2002 |
-2 |
-38 |
-24 |
-23 |
| 2001 |
+4 |
-1 |
-51 |
-48 |
| 2000 |
+3 |
-13 |
+14 |
-26 |
| 1999 |
+38 |
-7 |
+9 |
-6 |
| 1998 |
-9 |
+50 |
-54 |
+36 |
| 1997 |
-4 |
+28 |
-21 |
+30 |
| 1996 |
-5 |
+3 |
-15 |
+3 |
| 1995 |
+1 |
+6 |
+3 |
+9 |
| 1994 |
-2 |
+1 |
-4 |
-2 |
Some totals:
| |
Positive |
Negative |
| Friday Before: |
5 |
6 |
| Tuesday After: |
7 |
4 |
| |
|
|
| Week Before: |
5 |
6 |
| Week After: |
6 |
5 |
Of the 5 Fridays before that were
positive, the Tuesday after was positive 2 times.
Of the 5 Fridays before that were positive, the Tuesday after
was negative 3 times.
Of the 6 Fridays before that were negative, the
Tuesday after was positive 5 times.
Of the 6 Fridays before that were negative, the Tuesday after
was negative 1 time.
Of the 5 weeks before that were positive, the week after was
positive 3 times.
Of the 5 weeks before that were positive, the week after was
negative 2 times.
Of the 6 weeks before that were negative, the week after was
positive 3 times.
Of the 6 weeks before that were negative, the week after was
negative 3 times.
Obviously this is a very small sampling of data and the
information is not really worth much. I just feel the next
several days are a very tough call and thought I'd throw that
out there to possibly help you with your decisions. One
thing to note is that the Tuesday after Labor Day saw some big
moves up or down so it is an important short term call. 5
of the 11 last of these Tuesday's saw a move of close to 1% or
more.
Through Thursday, the S&P 500 is
up 16 points this week. The big question I have been having is
whether this rally is just an oversold bounce or if it, in the face
of the terrible news we've had this week, is a sign of how strong
the market currently is.
I'm leaning toward playing it safe so look for an email alert this
morning. (or check out
this page on the message board before the deadline).
One thing I am going to do is take my F fund gains and run.
The F fund is up about 1% since I mentioned it as a good opportunity
over the G fund as a safe haven on August 18. It may have some
legs left but it looks a bit exhausted. I don't want to give
back those gains. The G fund should see that penny gain within
the next 2 or 3 days.
The I fund has been very strong with the international stocks
shooting up and the dollar dropping like a rock in the past 2 days.
I don't have a very good read on what will happen there next.
If you are trying to time the market it doesn't get any tougher than
this. We have a highly volatile market and it is a virtual a
coin flip as to which way it goes in the days ahead. You have
to decide if you want to take a risk or not.
That's all for today.
Currently 70% S and 30% F fund but this will likely change
before the deadline Friday. Thanks for reading.
Have a great holiday weekend.