FEATURED EXPERT
Volume Speaks Volumes from April
1st
by Jack Schannep
08-APR-05
Jack Schannep explains that this bull market may have further to run.
Learn why and find out why January may be a more favorable time of the
year to invest. Take a look at this expert’s analysis and benefit from
his advice.
Volume Speaks Volumes from April
1stMarch saw a new monthly
high for volume in this bull market. As you know from the Special Report
“There’s Something About Volume,” volume usually (3/4th of the time)
“tops” some 5 months or so before the market does, which implies this
bull market has further to run. Yes, it HAS topped the same month as the
market 4 of 24 times so that is always a possibility. The last couple
of months Jack Schannep has referred to Seasonal Affected Disorder (S.A.D.),
a scientific term for the “gloom period” that encompasses January and
February each year. Since Schannep felt this phenomenon might have some
relevance to the stock market, as previously reported he did some
research and found that January 24th was at or near the annual low over
numerous years, and looks like it could hold true this year as the low
for 2005. That would be quite a coincidence, but what is most surprising
to discover is the frequency that January is the month when the annual
low has occurred each year over the last 55 years. While it is only one
of 12 months you might expect it to be the low month of the year just 8%
of the time, but because the market has a long-term upward bias it could
be expected that the low month would be at the first of the year more
than that, perhaps two or three times that at 16% or 24%. Actually,
January has been the month of the annual low 41% of the time since 1950!
The only other month to have more than 5% of the annual lows has been
October with 12%. And the date in January of the annual low has been far
more times than any other date, the first trading day of the year, not
the 24th, although this year the 24th is the low to-date. The first
trading day of the year has been THE low of that year 9 of those years.
Over half of the time, 29 of the last 56 years (52%), the first trading
day of January has been at or within 5% of the low, for an average of
being within 1.35%. As a matter of fact, 77% (43 out of 56 years) have
averaged as a group within 4% of the annual lows. Now there’s something
to stick in your calendar and to consider when you make your annual
I.R.A. contribution.
I’m sure you’ve seen the statistics that show the sooner each year
you make your investment the better are the results. Investing in
January rather than December, even if the amounts invested and returns
were the same, would favor the earlier date with an 8% greater ending
amount. Sometimes investing seems simple, right? But then there are the
other times, which seem to be most of the time, when its not so simple.
BOTTOM LINE
New record volume speaks favorably for the stock market’s peak being
further ahead of us, and although this indicator is rather simplistic
and hardly 100% accurate it is nonetheless reliable enough (75%) to
warrant our attention. As the three of the four market bug-a-boos have
faded somewhat in this new year (the election definitely, Iraq and
terrorism for the moment), the fourth (oil) continues to block the
markets progress. While Schannep, who deals in Spiders (AMEX:
SPY) and Diamonds (AMEX: DIA), has never expected any fireworks on the
upside this year, he does expect the January low to hold, or at least be
close to the low for the year as the historical record would suggest.
That being the case, and with Schannep and his team’s Indicators
continuing with favorable signals, this is a time to “keep the faith”,
hold investment positions, and hope for and expect a better prospect as
we move forward.
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& TheDowTheory.com
