which way do the markets usually go after a bank holiday?

Money_Grabber13579

mrposhman wrote: »

Doesn't December usually work the other way around.

A certain mr robbie burns seems to think so as this is usually the only month he says he trades the indices as they generally RISE over christmas time into January.

The December effect theory states that traders will want to crystallise any losses they might have so they sell in December so they can write those losses off against tax. Like any theory however, there are flaws, but traditionally, this effect was always known for selling in dec and buying in jan.

mrposhman

Money_Grabber13579 wrote: »

The December effect theory states that traders will want to crystallise any losses they might have so they sell in December so they can write those losses off against tax. Like any theory however, there are flaws, but traditionally, this effect was always known for selling in dec and buying in jan.

Tax year ends 5th April not December so that theory is clearly only based on the US and not the UK.

The stats (according to the Naked trader, I've not researched this) suggest that the strongest week of the fiscal year is the 51st week, with the 2nd strongest being the 52nd week apparantly. The probability of positive returns in December are 69% with the only significant fall occurring in 1981.

You may be talking about the Dow but not the Ftse.

Money_Grabber13579

mrposhman wrote: »

Tax year ends 5th April not December so that theory is clearly only based on the US and not the UK.

The stats (according to the Naked trader, I've not researched this) suggest that the strongest week of the fiscal year is the 51st week, with the 2nd strongest being the 52nd week apparantly. The probability of positive returns in December are 69% with the only significant fall occurring in 1981.

You may be talking about the Dow but not the Ftse.

That's the strange thing about it! It does apply (allegedly!) over here even though it's not a tax year end! Having said that, I don't necessarily believe it as I think it's impossible to predict what share prices will do!

mrposhman

Money_Grabber13579 wrote: »

That's the strange thing about it! It does apply (allegedly!) over here even though it's not a tax year end! Having said that, I don't necessarily believe it as I think it's impossible to predict what share prices will do!

I think your "allegedly" is just that. Its all theory but the stats clearly don't back the theory up therefore the theory is seriously flawed.

I've always preferred stats over theories.

Money_Grabber13579

Yea I think I'd tend to agree with you on that one. The weekend effect is much stronger than the December effect, although even with it there are anomalies.