Fed Halloween Decision-the masquerie trick!

SELL in May and go away. Comeback again on Leger Day
That bit of investor folklore lies near the heart of one of the latest market-timing strategies to capture public attention. It's an incredibly simple idea, involving just two moves a year: Sell all your stocks at the very end of April and reinvest the money on Oct. 31.
This is sometimes called the Halloween Indicator. Indeed, the concept has withstood a considerable amount of statistical scrutiny. A kind of hidden agenda in masquerie disguise.

Leger day refers to the St Leger horse race at Doncaster, which is normally held in the middle of September.Pic shows Frenchgate Ladies day at Doncaster Racecourse.

Halloween is historically the most profitable time of the year to put money into the stock market.
Stock market history has a way of repeating itself that can make for the easiest of outperformances.
Year in, year out, the best performing half of the year for shares almost anywhere in the world runs from November to April, and the worst from May to October.
Still, some researchers suspect that the indicator may be a statistical fluke. After all, they contend, many money managers program their computers to continually search history for price patterns, so it is quite likely that many of those turn out to be meaningless coincidences. Indeed, researchers often advise that we ignore patterns that aren't also found in other places and times.

Surprising consistency
Over the last 24 years, the UK stock market has risen 22 times from November to April, and fallen just twice.
From May to October it rose 12 times and fell 12. According to data compiled by stock market historian David Schwartz, the UK market managed double digit gains throughout the 1980s and 1990s almost entirely due to the gains piled on from November to April.
The summer months, on average, produced no gains at all.
See FTSE historic chart
The same is true in the US. Over the 50 years from 1924 to 2003, the Dow Jones Industrial Average has added a total 9,471.26 points from November to April and just 850.94 points in the rest of the year.
Moreover, the Halloween Indicator is not a modern phenomenon: It has been present in Britain, for example, since 1694.
Another way to guard against spurious price patterns is to find a plausible explanation for why an apparent pattern should exist in the first place.

In the case of the Halloween Indicator, Mr. Bouman and Professor Jacobsen have such an explanation. They have found that the magnitude of the Halloween Indicator in a given country is highly correlated to the length and timing of that country's average summer vacation.
How would that help explain the Halloween Indicator? Through extensive surveys, they found that many investors reduce their equity exposure before taking their summer holidays. Such selling puts a damper on the stock market's return during the summer months and the reinvestment provides an extra push in the fall.

Before selling all your stocks on April 30, remember that transaction costs and taxes can take a big bite out of the Halloween Indicator's advantage. That said, however, the pattern seems real, and might provide this general advice for investors:
If you are ready to invest in the stock market and are looking for the right time to do so, the Halloween Indicator suggests that autumn offers a better climate than the spring. Conversely, if you're going to be selling some stock, springtime is the most favorable season.
The increasing influence of Wall Street, which dominates almost every bourse across the globe, has put paid to any reasonable chance that September could regularly be a good month.
September is the end of the US mutual fund fiscal year and the last thing those institutions want is to put out annual reports showing they still hold positions in the year’s worst performing stocks.
So they turf out those losing shares in a price bonfire which almost always knocks September performances as a whole.
Indeed, so severe is the effect on prices from this selling process, that picking up last year’s losers on the cheap just as US institutions are ditching them and holding them for a year is a strategy which can produce spectacular performance.

October storms
October, a month of big storms and big market crashes in 1929, 1987, 1991,1997 and 2007 tends to be a volatile month too. It is only by November, when the markets are looking forward to the start of a new calendar year, that the reliably strong months begin.

What of Halloween?
According to Celtic legend, Halloween represents the time when the barrier between the spirit world and the material world is at its weakest.
Halloween – at least in its position in the ancient calendar - is an astronomical crossover, the halfway point between the solar equinox of equal length days and nights, and the winter solstice when night is at its maximum.
As a festival, it far predates the Christian All Saints day, November 1, and All Hallow’s Eve which refers to it.
The Irish Gaelic word for Halloween is "Samhain" (pronounced Sa-Wain), and that is now the modern Gaelic word for November. As the spirit world recedes at Halloween, perhaps we are being told which month to consider in the material one?


Tracking the Dow Movement On Monday (29/10/07)

Is the Fed gonna give the financial markets around the globe a Halloween TRICK or TREAT?That come Wednesday...the verdict!
A rate cut---the party keep rocking!The pumpkin will dance through the night.If he don't change his outfit for the halloween,well,the party will come to an abrupt halt.The last half hour of trading suggest that it's going to be bearish.Look at the 3-black crows that feed on the carcass.

The Monday candlestick was a weak bull out of exhaustion.Putting the candlestick pairs together,this is called the shooting-star.The end of the road.The sky is the limit.I have also track the USD/JPY currency and noticed that the $ has strengthen.Are the currency traders pretty aware something is amiss to maintain the $ strength?I have long 40 lots open position @ 114.69.