Seasonality and Near Term Support Levels

Here is my most recent column for SFO Magazine:

STOCKS: Don't Be A Hero—Another Test of 1120 Ahead?

Friday, September 30, 2011
By J.C. Parets

Wall Street is a ghost town this morning as many of our Jewish colleagues are home with their families in observance of Rosh Hashanah today. The old saying goes: Buy Rosh Hashanah, Sell Yom Kippur, which is only about a week away.

This phrase gets thrown around every year even though the Stock Trader’s Almanac claims that it stopped working in the middle of the last century. In fact, my trusty almanac says to do the opposite, Sell Rosh Hashanah, Buy Yom Kippur. Recent history has shown that selling stocks prior to the weeklong span between the Jewish New Year and Day of Atonement has helped avoid some brutal selloffs. September and October have a history of being terrible months for stock investors but with that consequence, have often put in bear market lows.

BEST SIX MONTHS

Another phrase that gets thrown around a lot is Sell in May and Go Away. What you don’t hear as much is, Remember to Buy in November. Historically, the best time for the stock market is the six month period that leads up to May, hence why the saying goes, Sell in May. In the early days of October as we approach the month of November, we want to keep this phenomenon in the back of our minds.

KEY LEVELS TO WATCH NOW

Now, regardless of these seasonal tendencies, we want to really focus our attention on what the market is telling us today, not 60 years ago. This is where the charts help us.

Read the rest over at SFO Magazine