See full list on stockcharts.com
Top 5 Reasons You Need to Use the Stock Trader's Almanac
As comes to a close, it's time to start thinking about next year's investment and trading roadmap.
It happens every year, and this year is no different. The end of the year, among other things, is a time for reflection and thinking about the following year.
For individual investors and traders, it means a time to strategize your investment plan. No doubt was a challenging year. The bull market stalled, Russia invaded Ukraine, interest rates rose, and inflation impacted just about everyone.
If there was one phrase to describe the stock market, it would be "jumping just like a pogo stick", springing up on good news, and falling on bad.
It's possible that a similar type of behavior may dominate the financial markets in If it does, it means you will need to be more strategic, disciplined, and engaged with the markets.
See full list on stockcharts.com
The March non-farm payrolls data revealed that the US economy added , jobs, which is higher than the estimated , Additionally, the unemployment rate dropped to 3. After yesterday's massive selloff—mainly due to comments from Fed officials suggesting interest rate cuts may not happen this year—you'd think today's strong jobs report would have made investors jittery. It would extend the narrative that interest rates will remain on hold for longer. But that's not what happened.But there's no way of knowing what could happen in the stock markets. That's why having the Stock Trader's Almanac (herein referred to as "Almanac") as part of your trading toolkit can be a helpful guide as you plan your trades for the next year.
How Can the Almanac Help?
Imagine being alerted to favorable trading days, or knowing the probability of the Dow Jones Industrial Average, S&P Index, and Nasdaq Composite rising on any given trading day.
Want to get a heads-up on what to expect around options expirations and holidays? Also, given that is a pre-election year, what unique characteristics will you need to consider? While there are no guarantees when it comes to the financial market, having the Almanac at arm's length can help you connect with the market, which, in turn, can increase your market awareness.
There are many ways the Almanac can help.
You can identify bullish and bearish days; you can see the probability of up days for the three broader indexes in each day in the planner; you can get stock and exchange-traded fund (ETF) updates; and you can get many more valuable insights. Here are five important ones.
1. January Indicator Trifecta: Santa Claus Rally, January Barometer, First Five Days
You've probably heard of the Santa Claus Rally—it starts at the end of December and carries into the first two trading days in January.
According to the Almanac, since , the average gain during this short period is % and, if Santa fails to show up, either a bear market is lurking or, later in the year, you could pick up a handful of stocks for a bargain.
January is an important month in the stock markets. Heard the adage, "As January goes, so goes the year?" That's the premise of the January Barometer.
In the Almanac, you'll find a graphic representation of the January Barometer, which compares the January change to the full-year change. The data goes as far back as and you'll see that only a few years were major errors.
You may be anxious to start trading on the first trading day of , but it may be wiser to wait it out and see how the first five trading days of the year pan out.
The Almanac has a short write-up about how January's first five trading days can be an early warning system for the year.
See full list on stockcharts.com As comes to a close, it's time to start thinking about next year's investment and trading roadmap. It happens every year, and this year is no different. The end of the year, among other things, is a time for reflection and thinking about the following year. For individual investors and traders, it means a time to strategize your investment plan. No doubt was a challenging year.For example, the Almanac states, "S&P gains in January's first five days preceded full-year gains 83% of the time, 13 of last 18 pre-election years followed first five day's direction." It goes on to provide helpful statistics, such as how the indexes performed during the month, which years were the best performers, which years were the worst, performance during options expiration week, and so on.
How To Use the Info in StockCharts
- Bring up a daily chart of the S&P Index ($SPX).
- If the best day for $SPX was on January 3, , from the Range dropdown menu, click Select Start/End (use December 31, –December 31, ).
- Then, compare it with the five-day change and the year change.
- Follow a similar process for the worst day, try it with other indexes, and try out different dates from the Almanac.
Have fun with it.
See full list on stockcharts.com Chip Anderson is the founder and president of StockCharts. He founded the company after working as a Windows developer and corporate consultant at Microsoft from to Since , Chip has guided the growth and development of StockCharts. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts. In addition to his blog, Chip frequently contributes important announcements, site news, and other content to our ChartWatchers Newsletter.
2. The Sweet Spot of the 4-Year Cycle: Q4 Midterm Year to Q2 Pre-Election Year
Remember, is the third year of a presidential term. According to the Almanac, there has only been one down year in the third year of a presidential term since The four-year political stock market cycle is interesting—there's a strong chance we may have seen the midterm bottom in October What does this mean going forward?
Once again, the Almanac can provide some insight.
3.
The Best Months Switching Strategies
These strategies have a year track record and can form a base to plan your trading strategies for While reading about the different strategies, make notes in the planner so you can put your thoughts down, plan ahead, and modify when necessary.
Four of the switching strategies are:
- "Best Six Months"
- MACD-Timing With "Best Six Months"
- Nasdaq's "Best Eight Months" With MACD Timing
- Triple Returns, Fewer Trades: Best 6 + 4-year Cycle
It's worth knowing each of these strategies, as they could help you potentially do better than a buy-and-hold investment strategy.
4. More Seasonal Patterns
What's the best month for the Dow Jones Industrial Average?
Jayanthi gopalakrishnan biography John Hill Of Futures Truth. Think of all those trading systems you see advertised and hyped. Haven't you wondered whether they work? Of course you have. John Hill is the president and founder of Futures Truth magazine, which tracks, tests, and evaluates trading systems and then publishes the results.What about the other indexes? In the Almanac, you'll find seasonal pattern charts for the broader indexes for pre-election years vs. all years. This visual representation gives you an idea of which months are likely to perform better than others. In short, you'll know when to potentially add, hold, or sell positions.
5.
Sector Seasonality
If you've been involved with the markets for a while, you should know that different sectors go through positive and negative seasonal periods. So which sectors should you be holding, and when? You'll find a sector index seasonality table listing the various sector indexes represented by their ETF proxy.
The start and end of the seasonality are displayed along with the , , and 5-year average percentage returns.
Each month is divided into three parts—beginning, middle, and end. Can you guess which month is positive for most of the sectors?
If you have the Almanac, you can start looking at the sectors a month or so ahead of when the seasonality begins. Again, make notes in the planner to give you a heads-up. Consider creating an Almanac ChartList in your StockCharts platform.
Some Sector Tools in StockCharts
- The Sector Summary in StockCharts displays the performance of the 11 S&P sectors.
See full list on stockcharts.com: Jayanthi Gopalakrishnan has more than 20 years of experience as a writer and managing editor with a focus on financial content. She currently serves as director of content at Previously, Jayanthi spent 17 years as the editor for Technical Analysis of Stocks & Commodities magazine.
- The Industry Summary breaks down the sectors even further by looking at specific industries within the sectors.
- The Sector PerfChart is an interactive visual chart that displays sector performance.
CHART 1: INDUSTRY PERFORMANCE. The S&P Sector ETFs PerfCharts shows you the performance of the 11 S&P sectors.
Chart source: For illustrative purposes only.
The Bottom Line
When it comes to the stock markets, you can never be truly prepared. The best you can do is work with probabilities, and the Almanac can be a big help. It gives you an overall view of the market, zeros in on different cyclical patterns, and drills down to fundamental and technical indicators.
The month-by-month strategies, and the explanations of seasonal trends and sector performances, can help you become a more empowered trader and investor.
One last word: Keep an eye on the December closing low. That, as you'll find out from the Almanac, can have a big impact on next year's performance. So get a head start and start planning for Then, it's on to the next-next year.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.
Happy charting!