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Where to Invest Now? Seasonal factors Studies show that the stock market (S&P500 and Dow Jones) have a seasonal bias, with stocks being bullish and making most of their gains between end of October to end of April with the weakest period being May (sell in May and go away) to October, September tends to be one of the weakest months. Whilst this is a broad statement and of course individual stocks do not have to follow the seasonal trend its worth keeping an eye on the calendar. Below is a graph showing the last 50 years results on Dow Jones Industrial Average As you can see September is the most negative (best month to be short) and October (second half normally) to January tends to positive. December sees lower volatility and trading volumes as the Christmas holiday season kicks in, we also year-end position squaring up which overall tends to have a positive effect. A further study I had done involves buying the market a few days before the US Thanksgiving Holiday which in 2011 is 24 th November so I would start to look at buying in or if you are already long look to increase bullish trades around the 21 st November 2011 and hold until the first few days of January 2012. If your spread betting just use a March
contract. You can also look at fixed odds bet with a broker such as www.betonmarkets.net whilst January tends to be positive overall, I have noticed you tend to get a dip after the first week or so of the year as some of the New Year optimism wares off. Positive stocks within the S&P500 Whilst many will try and bargain hunt after some of the recent falls it may be better to look at shares which have remained strong over the last few months, the idea being that they will continue to do well into the year end. All these stocks are large companies which are traded in the S&P500 and can be easily spread bet. Many based in the UK or Europe tend to stick to their home markets however you will find plenty of opportunities in the US.
S&P 500 Strong list Note: Ignore Motorola MMI which has recently been taken over by Google. You will find price charts for all the above in Sharescope or you can use a free website like www.stockcharts.com Example from the list: NiSource (NYSE:NI) which can traded with most spread betting companies. I explain how to place a bet in the workbook. Overall been in a strong uptrend.
TIP: If you re on a smaller account look at the lower priced shares such as those in the $20 to $40 range as you will find these easier to trade rather than a $300 share such Autozone (AZO) which is prone to larger swings and require larger margins. 350 300 250 200 AutoZone Inc (NYSE:AZO) Ord 331.25 300 250 200 150 150 100 100 5 5 Volume (Daily) - M's 30/6/08 '09 Jul '10 Jul '11 7/10/11 www.sharescope.co.uk Chart (c) ShareScope
Goldman Sachs 3,6,12 month forecasts The well-known investment house Goldman Sachs have issued a yearend target of 1250 on the S&P500 which was reduced from 1400. Whilst I look for a positive S&P500 between now and certainly the first quarter of 2012 I believe better and more profitable opportunities are in individual stocks than just following the index. Summary The last few months have been extremely volatile and being short the major indices and long Gold and Treasury Bonds has been the correct trade. As we head in to the year-end I see money flow away from Gold and Bonds and move back in to shares and expect US markets and stocks to have a strong finish to 2011. Want to take you re trading and investing to the next level? Vince Stanzione has run the millionaire trader program since 2007. Every year he takes a small group of students and personally teaches and mentors them. Members get access to personal support, access to his trading tools as well as seeing the exact trades he is making. The program is open to those with a minimum account size of 5,000. To find out more please go to www.millionaire-trader.com