Market Cycles and Self-fulfilling Prophecies

By AdamKhoo http://www.ProfitFromThePanic.com ========================================== "How To Make Your Fortune From The Greatest Investment Opportunity Since The Great Depression!" ========================================== The market is a predominantly irrational place filled with many investors who will believe anything and everything. Therefore, it is not a surprise that superstition and self-fulfilling prophecies prevail. That's actually not a bad thing if you realise how you can leverage on knowing when and what will happen. It can help you decide whether to profit take or hedge your position. Here are some interesting events that have been observed to happen. However it is important to note there are exceptions when they do not occur. Pattern 1: January Barometer Often used by analysts as an indication of the year's sentiment. If January ends down, the year to follow will be bearish (downward trend). If it closes up, the year will be bullish (upward trend). During election years when the first five days of January closed down with the month of January also down, the year had always closed negative. Pattern 2: The January Effect Here's a bit of January Effect Trivia: Traditionally in bullish years, the 10 best performing stocks on the S&P 500 will end the year up, while the 10 worst performers will go down. Pattern 3: Sell in May and Go Away A trader's superstition that has more credit than most would like to admit. The months from November to April are often bullish, while May to Halloween (end October) are bearish. September is traditionally one of the worst months of the trading year. Other interesting trivia: ------------------------- 1) The first trading day of the month is reliably a very bullish day - often the month's most bullish. 2) April is the most bullish month of any trading year. 3) Quarter 3 is the worse quarter of the trading year starting with July and ending with September - with September being the worst of those three months. 4) November, December and January make up the best three months of a trading year. 5) The end of October starts the best six months on the S&P500 and the start of the best eight months on the NASDAQ. To your investing success, Adam