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Don't forget to visit my New WSS "Technical Trading 101" 25-article series: 1) Intro to Technical Analysis 2) Fundamental vs. Technical Analysis 3) Types of Technical Trading More to come!
NEW YORK (Dow Jones)--There's only one October, but it's always a doozy: October is both the "jinx" month because of the crashes in 1929 and 1987 and the "mini" crash of Friday the 13th, 1989, and, more recently, a stellar month for the stock market, according to the Stock Trader's Almanac. Investors have good reason to fear the jinx this time around because stock-market plunges sometimes happen in waves: Black Monday in 1987 was preceded by big dips on Oct. 14 (a then-record point drop for the Dow) and Oct. 16. The great crash of 1929 featured Black Thursday, Black Monday and Black Tuesday. The Dow Jones Industrial Average recently fell 11 points, or 0.1%, to 10839, on an extremely volatile week that featured its biggest point-drop ever and its biggest point gain since 2002. The Standard & Poor's 500 is trading down 3 points, or 0.3%, to 1163. The Dow has now had its worst run in terms of quarterly declines since 1978, with four straight losses. Economists warn that the wave of bank failures and freeze in lending around the world puts commercial activity at risk of slowing to a standstill worldwide. That's a scenario that played out in the early 1930s, resulting in the Great Depression and several currency crises. To some, the recent volatility demands comparison with that era. "I have never seen such a drop in my trading experience," said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund. "Neither have most people...only '87, but '87 was different...the market (had) just topped and (had) gone up a lot before. This is probably more like the 1930s." Before investors despair, however, October is also the best-performing month in the last decade for the Dow and the Standard & Poor's 500, and has gained a reputation as a "bear killer," writes Jeffrey Hirsch in the Stock Trader's Almanac. "October is a great time to buy," Hirsch writes. This month "turned the tide in 11 post World War II bear markets." Technical levels are not as reliable when so much hinges on events in Washington, D.C., and elsewhere, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. Nevertheless, Detrick is hopeful that a long-term moving average may serve as support for the market. The 160-month S&P 500 moving average served as support in 2002 and 2003, Detrick said, and is now around 1124. "We were encouraged that yesterday we closed above that level," Detrick said. "Since the early 1980s, that trend line has served as support." Plus, the Chicago Board Options Exchange volatility index, which measures the premiums paid on options to protect against swings in the stock market, rose 91% in September, to close above 40. On the last eight occasions the VIX rose more than 40%, the market was higher by 5% plus three months later. Looking at 10 past market crises - excluding exogenous events such as Pearl Harbor, Watergate and 9/11 - Hirsch found a range of outcomes in stock levels a year later. Returns on the Dow ranged from a loss of 32% a year after the oil embargo in 1973 to a gain of 23% after the 1987 crash. One thing's for sure: Action on the markets this fall will be remembered for many years. "It's rough on your stomach - that's for sure," Detrick said. "It's exciting what we're living through; they're going to write books about this someday." "However it ends, it's exciting to" be in the middle of it, he added. - Rob Curran, Dow Jones Newswires; 201-938-5176; robert.curran@dowjones.com Copyright (c) 2008 Dow Jones & Company, Inc.
NEW YORK (Dow Jones)--There's only one October, but it's always a doozy: October is both the "jinx" month because of the crashes in 1929 and 1987 and the "mini" crash of Friday the 13th, 1989, and, more recently, a stellar month for the stock market, according to the Stock Trader's Almanac.
Investors have good reason to fear the jinx this time around because stock-market plunges sometimes happen in waves: Black Monday in 1987 was preceded by big dips on Oct. 14 (a then-record point drop for the Dow) and Oct. 16. The great crash of 1929 featured Black Thursday, Black Monday and Black Tuesday.
The Dow Jones Industrial Average recently fell 11 points, or 0.1%, to 10839, on an extremely volatile week that featured its biggest point-drop ever and its biggest point gain since 2002. The Standard & Poor's 500 is trading down 3 points, or 0.3%, to 1163. The Dow has now had its worst run in terms of quarterly declines since 1978, with four straight losses.
Economists warn that the wave of bank failures and freeze in lending around the world puts commercial activity at risk of slowing to a standstill worldwide. That's a scenario that played out in the early 1930s, resulting in the Great Depression and several currency crises.
To some, the recent volatility demands comparison with that era.
"I have never seen such a drop in my trading experience," said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund. "Neither have most people...only '87, but '87 was different...the market (had) just topped and (had) gone up a lot before. This is probably more like the 1930s."
Before investors despair, however, October is also the best-performing month in the last decade for the Dow and the Standard & Poor's 500, and has gained a reputation as a "bear killer," writes Jeffrey Hirsch in the Stock Trader's Almanac.
"October is a great time to buy," Hirsch writes. This month "turned the tide in 11 post World War II bear markets."
Technical levels are not as reliable when so much hinges on events in Washington, D.C., and elsewhere, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.
Nevertheless, Detrick is hopeful that a long-term moving average may serve as support for the market.
The 160-month S&P 500 moving average served as support in 2002 and 2003, Detrick said, and is now around 1124.
"We were encouraged that yesterday we closed above that level," Detrick said. "Since the early 1980s, that trend line has served as support."
Plus, the Chicago Board Options Exchange volatility index, which measures the premiums paid on options to protect against swings in the stock market, rose 91% in September, to close above 40. On the last eight occasions the VIX rose more than 40%, the market was higher by 5% plus three months later.
Looking at 10 past market crises - excluding exogenous events such as Pearl Harbor, Watergate and 9/11 - Hirsch found a range of outcomes in stock levels a year later. Returns on the Dow ranged from a loss of 32% a year after the oil embargo in 1973 to a gain of 23% after the 1987 crash.
One thing's for sure: Action on the markets this fall will be remembered for many years.
"It's rough on your stomach - that's for sure," Detrick said. "It's exciting what we're living through; they're going to write books about this someday."
"However it ends, it's exciting to" be in the middle of it, he added.
- Rob Curran, Dow Jones Newswires; 201-938-5176; robert.curran@dowjones.com
Copyright (c) 2008 Dow Jones & Company, Inc.
go to the Nasdaq OTB BB site: www.otcbb.com
My quote for the day is ''Honesty is like an icicle; once it melts that's the end of it'' One website I post a quote every day.
My quote for the day is ''Honesty is like an icicle; once it melts that's the end of it''
One website I post a quote every day.
Are you only buying shares with the letter D?
Now I understand your formula for stocks. Good news sell, bad news sell, no news sell. What ever you do not buy and hold.
Now I understand your formula for stocks.
Good news sell, bad news sell, no news sell.
What ever you do not buy and hold.