Profit From The Panic 163
However, the October effect is nowadays considered mainly to be a psychological expectation rather than an actual phenomenon. That’s because most statistics go against the theory. Pattern 5: Santa Claus Rally This is a surge in stock prices that often occurs in the week between Christmas and New Year’s Day. A few events contribute to the reliability of this: • Pre-holiday rallies for Christmas Eve and New Year’s Eve. • Index Addition - Changes in the Major Indices’ basket of stocks • Investors pumping in extra funds from year-end bonuses and incentive pay outs • Fund Managers shopping for End of the Quarter Window Dressings 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.