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Crowder Investment Research (Crowder's Corner)

Positive Seasonality Approaching

Thanksgiving is next week and historically the market performs very well the day before and the day after the holiday. The Stock Trader’s Almanac states, “long into weakness prior, exit into strength after”.

They go on to state that

“for 35 years the combination of the Wednesday before Thanksgiving and the Friday after had a great track record, except for two occasions. Since 1988, Wednesday-Friday lost six of eighteen times with a total Dow point-gain of 502.41 versus a Wednesday-Monday total Dow point-gain of 704.77 with only four losses. The best strategy seems to be coming into the week long and exiting into strength Friday or Monday.”

If the market continues to sell-off tomorrow we could witness another push into oversold territory. This would certainly make for a picture perfect set-up. Unfortunately, picture perfect does not guarantee the success of a trade. However, the probability of a short-term bounce will increase dramatically if the market enters next week’s positive seasonal bias in an oversold state.

Tomorrow is options expiration and as usual I will go over the three strategies we follow. It will be interesting to see how the new SPY Diagonal LEAPS strategy fared during the recent pullback.

Overbought/Oversold for November 15, 2007

S&P (SPY) - 36.8 (neutral)
Russell 2000 (IWM) - 37.6 (neutral)
Dow (DIA) - 37.6 (neutral)
Nasdaq 100 (QQQQ) - 39.2 (neutral)

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Andrew Crowder, Chief Options Strategist, Crowder Investment Research, LLC

Published Friday, November 16, 2007 2:16 AM by acrowder
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Comments

 

tonyleachsf said:

I could use some positive seasonality!
November 16, 2007 12:47 AM
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The above content is provided for educational and informational purposes only, does not constitute a recommendation to enter in any securities transactions or to engage in any of the investment strategies presented in such content, and does not represent the opinions of Zecco or its employees.


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Crowder Investment Research ...
At Crowder Investment Research, LLC (www.crowderinvestments.com) we offer our thoughts on several stock and options-based strategies that might complement your long-term investment objectives. We provide you with the trading tools necessary to produce returns that attempt to outperform the major indices on an annual basis regardless of the economic environment. Our extensive research of numerous options-based strategies has shown that uncomplicated strategies, when applied effectively, consistently provide greater gains. Read the thoughts and ideas of our Chief Options Strategist, Andrew Crowder. He will provide you with educational tools, useful technical and seasonal indicators, and a wealth of investment research (updated daily) to increase your stock and options trading knowledge.

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