Nasdaq Composite Chart Analysis
Drop, Chop & Rock
A Repeating Pattern?
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| Sell in May and Go Away But Return in September |
In the June issue of The Gerritz Letter, I eluded to the possibility that 2012 could look a lot like 2010 and 2011. The above 2010 to 2012 chart of the Nasdaq suggests that history may in fact repeat itself.
In the spring the market sells off (the drop). Then, it enters a volatile, trendless, up and down period (the chop) that lasts throughout the dog days of summer. Finally, in the fall, volatility subsides and the market stages a nice rally into the end of the year (the rock).
Thesis support:
Seasonality
The Presidential Election Cycle
In a recent blog post, I included the following Election Year chart analysis>
From a seasonality standpoint, markets generally
perform well in U.S Presidential Election Years.
The History
Election Year Returns
The action this coming week should tell a lot about the near term direction of the market. Will the market just continue to rise from here or will it turn south again to retest the June lows. History suggests that a retest in more likely.
This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.
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