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Back from Big Bear....

mguru
Feb 04, 2008 09:33AM
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DABOSS
Feb 04, 2008 09:36AM
Re: Back from Big Bear....re January effect

lake3054
Feb 04, 2008 09:51AM
Re: Back from Big Bear....re January effect
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mguru
Feb 04, 2008 09:51AM

Midday Tidbits — The January Effect

Posted by David Gaffen

 

The first five days did not go well, but that could be a blessing in disguise.
  • The first five days of the year, when the S&P 500 lost 5.3%, was the worst since 1930, points out Jeffrey Hirsch of the Stock Trader’s Almanac. However, Mr. Hirsch says the “first five days” indicator, which has proven reasonably accurate in predicting how the rest of the year will unfold, is less accurate when the market falls in that time. Furthermore, the years when the market starts off notably terribly, such as in 1991 and 1978, stocks ended the year higher. As Bill Luby of the Vix and More blog put it, “If there is any message worth remembering from the data above, it is that good starts tend to persist, ugly ones tend to reverse, and slightly down beginnings run the greatest risk of turning into a rout.”
  • The financial stocks, along with other sectors, are taking things hard in part because Goldman Sachs became the most recent prominent investment bank to predict that the economy will fall into a recession in 2008. “The latest data suggest that recession has now arrived, or will very shortly. The unemployment rate has now risen by more than 1/3 percentage point from the cycle trough,” economists at the firm write today. “Historically, this has invariably been associated with recession, typically starting immediately and almost always within three months.”
  • Tony Crescenzi of Miller Tabak notes that in general, for every $1 drop in stock prices, consumer spending falls by about four cents over the next 12 to 18 months. “With share prices down over 10% over the past three months, this not only means that consumer spending could be cut by $80 billion over the next 12-18 months, it also means that retail sales in the winter months could be quite weak, especially when the drop in share prices is combined with the many other strains consumers are facing,” he writes.
    • Re: Back from Big Bear....

    crazybill
    Feb 04, 2008 10:51AM
    Re: Back from Big Bear....
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    mguru
    Feb 04, 2008 11:17AM
    Re: Back from Big Bear....
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    lake3054
    Feb 04, 2008 11:37AM
    Re: Back from Big Bear....Hey lake..
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    mguru
    Feb 04, 2008 12:17PM
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