Sunday, November 28, 2004

Weekend Update

J.P Morgan, when asked what the stock market will do, replied, It will fluctuate.
Roger Nusbaum of Random Roger's Big Picture asked for thoughts on what's next for US Capital Markets. I get a sense from Roger that he's like that he's in the market, not going to miss the rally, but somewhat skeptical on the future move upward.

So, what is next for the markets? First, let's see how far this election rally has come.

Here's the breakdown of past election rallies if you would have invested at the close of the last day in October and sold at the close on the last day of December of the same year within an election year.

S&P 500
Time Period: 1964 - 2000
Total Elections: 10
Total Win%: 70.00%
Total Losing%: 30.00%
Average Profit: 3.85%
Average Loss: -2.74%
Largest Gain: 6.50%
Largest Loss: -7.63%

Time Period: 1916 - 2000
Total Elections: 22
Total Win%: 68.18%
Total Loss%: 31.82%
Average Profit: 5.63%
Average Loss: -5.44%
Largest Gain: 18.95%
Largest Loss: -15.29%

How does that compare with the current 2004 election rally?

The S&P 500 has moved 4.64% from its October close and the DJ-30 has moved 4.93% accordingly.

The S&P 500 has moved slightly ahead of its average profit of 3.85%. Nudging ever closer to its all-time high of 6.50% set back in the 1980 presidential election.

The DJ-30's current profit of 4.93% is still under its average profit of 5.63% and well off its all-time high of 18.95% occuring back in 1928.

What does all this mean? In my opinion, there is still head room for the market. Averages are just averages and the market can go anywhere it likes during the course of an individual data point. But, there's no denying the easy gains are behind us.

The key during these times are having proven exit strategies to protect your hard-earned gains. Letting the market take you out of your positions...not getting silly like me in trying to second-guess the market.

I hope to showcase some of my time-proven exit strategies in the days ahead.

Until then...

Daily System Updates
No open trades at this time.

Weekly System Updates
Long system trigger for AATK at Monday's market open. The system that generated this trade was same system that generated the SPDE trade for the previous week. So, as you know, system caters to penny-type stocks with high volatility. Holding periods are mid-term in length. This system is one of my riskiest systems. I trade very little size with trades from this system because losses can be extreme.

Current open system positions:
  • 1 QQQ long with current profit of 3.53%;
  • SPDE long with current loss of -7.69%.
Please read the disclaimer on the website. This is not a recommendation to buy, sell, or trade securities. Just a journal of my travels through Wall Street. I can buy, sell, or hold any positions mentioned on this website at anytime. So, be warned.

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