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This practical investment tool contains a wealth of information you can use to enhance your profit potential. Organized on a calendar basis, the Almanac alerts you to little-known market patterns and tendencies useful in forecasting market trends. You'll learn:
- How our presidential elections affect the economy and the stock market.
- How the passage of the Twentieth Amendment to the Constitution fathered the January Barometer, which has a 90.7% accuracy ratio.
- Why there is a significant market bias at certain times of the day, week, month, and year.
Even if you pay scant attention to cycles, indicators, and patterns, your investment survival could hinge on your interpretation on one of the recurring patterns found with these pages. Order your copy today!
Read an Excerpt
Stock Trader's Almanac 2005
By Jeffrey A. Hirsch Yale Hirsch
John Wiley & SonsISBN: 0-471-64936-8
Chapter OneJANUARY'S FIRST FIVE DAYS AN "EARLY WARNING" SYSTEM
Of the 34 up First Five Days since 1950, 29 were followed by full-year gains for an 85.3% accuracy ratio and a 13.8% average gain in those 34 years. Of the five exceptions, 1994 was a flat year and four were war-related: Vietnam military spending delayed start of 1966 bear market; ceasefire imminence in early 1973 raised stocks temporarily; Saddam Hussein turned 1990 into a bear; and the war on terrorism, instability in the Near and Middle East and corporate malfeasance shaped 2002 into one of the worst years on record. The 20 down First Five Days were followed by 10 up years and 10 down (50% accurate).
In 8 of the last 13 Post-Election Years the S&P 500 posted a loss for January's First Five Days. Six were followed by full-year losses averaging -11.1%. 1993 rebounded 7.1% after the sluggish 1992 economy that factored into Bush Senior's ouster and 1985 followed the trend of no losing "5" years (see page 126). Five Post-Election First Five Days showed gains and only one subsequent full year, 1973, was a loser. This was the start of the previous major bear - caused by Vietnam, Watergate and OPEC. The other four years gained 22.6% on average.
JANUARY January first trading day Dow up 10 of last 15 MONDAY 3
A good new chairman of the Federal Reserve Bank is worth a $10 billiontax cut. - Paul H. Douglas (U.S. Senator, 1949-1967)
Second trading day Dow up 10 of last 15 TUESDAY often with larger gains than first trading day 4 Brazil is the country of the future and always will be. - Brazilian joke
Average January gains last 34 years WEDNESDAY
NAS 3.9% Dow 2.0% S&P 1.9% Up 24 Down 10 Up 23 Down 11 Up 22 Down 12 Rank #1 Rank #2 Rank #1
Excellent firms don't believe in excellence - only in constant improvement and constant change. - Tom Peters (In Search of Excellence) THURSDAY 6
If you are not willing to study, if you are not sufficiently interested to investigate and analyze the stock market yourself, then I beg of you to become an outright long-pull investor, to buy good stocks, and hold on to them; for otherwise your chances of success as a trader will be nil.
- Humphrey B. Neill (Tape Reading and Market Tactics, 1931)
January's First Five Days, an "Early Warning" System (page 14) FRIDAY 7
When I have to depend upon hope in a trade, I get out of it. - Jesse Livermore
THE INCREDIBLE JANUARY BAROMETER (DEVISED 1972) ONLY FIVE SIGNIFICANT ERRORS IN 54 YEARS
Our January Barometer, devised by Yale Hirsch in 1972, states that as the S&P goes in January, the year follows suit. The indicator has registered only five major errors since 1950 for a 90.7% accuracy ratio. Vietnam affected 1966 and 1968; 1982 saw the start of a major bull market in August; two January rate cuts and 9/11 affected 2001; and the market in January 2003 was held down by the anticipation of military action in Iraq. (Almanac Investor newsletter subscribers were warned at the time not to heed the January Barometer's negative reading as it was being influenced by Iraqi concerns.)
Including the six flat years yields a 79.6% accuracy ratio. A full comparison of all monthly barometers for the Dow, S&P and NASDAQ at hirschorg.com/2005p016 details January's market forecasting prowess. Bear markets began or continued when Januarys suffered a loss (see page 44). Excluding 2001, full years followed January's direction in the last thirteen Post-Election years. See pages 18, 22 and 24 for more January Barometer items.
JANUARY MONDAY 10
To affect the quality of the day, that is the highest of the arts. - Henry David Thoreau
When everybody starts looking really smart, and not realizing that a lot of it was luck, I get scared. - Raphael Yavneh (Forbes)
Things may come to those who wait, but only the things left by those who hustle. - Abraham Lincoln (16th U.S. President, 1809-1865)
Mate selection is usually a far greater determinant of individual well-being than stock selection. - Ross Miller (President, Miller Risk Advisors, Paving Wall Street: Experimental Economics and the Quest for the Perfect Market, December 2001)
There is only one corner of the universe you can be certain of improving, and that's yourself. - Aldous Huxley (English author, Brave New World, 1894-1963)
SUNDAY 16 (Continues...)
Excerpted from Stock Trader's Almanac 2005 by Jeffrey A. Hirsch Yale Hirsch Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
2005 Strategy Calendar.
Prognosticating Tools And Patterns For 2005.
January’s First Five Days An “Early Warning” System.
The Incredible January Barometer (Devised 1972) Only Five Significant Errors In 54 Years.
January Barometer In Graphic Form Since 1950.
Hot January Industries Beat S&P 500 Next 11 Months.
1933 “Lame Duck” Amendment Reason January Barometer Works.
The Fifth Year Of Decades — No Losers In 120 Years.
Market Charts Of Post-Presidential Election Years.
Profit On Day Before St. Patrick’s Day.
Market Behavior When White House Changes Hands.
Post-Election Years: Paying The Piper.
The December Low Indicator: A Useful Prognosticating Tool.
Under Democrats $10,000 Grows To $279,705 But Only To $78,699 Under The Republicans.
Down Januarys: A Remarkable Record.
Top Performing Months Past 541/2Years Standard & Poor’s 500 & Dow Jones Industrials.
“Best Six Months” Still An Eye-Popping Strategy.
MACD-Timing Triples “Best Six Months” Results.
Top Performing NASDAQ Months Past 331/2Years.
Get More Out of NASDAQ’s “Best Eight Months” With MACD-Timing.
Dow Gains Most First Two Days Of Week.
2003 Daily Dow Point Changes.
Gridlock On Capitol Hill Is Best For The Markets.
A Rally For All Seasons.
First Month Of Quarters Is The Most Bullish.
Aura Of The Triple Witch — Quarters 1 And 4 Bullish But Down Weeks Trigger More Weakness Week After.
Almanac Investing 101.
A Correction For All Seasons.
Market Behavior Three Days Before And Three Days After Holidays.
Market Gains More Eight Days A Months Than On All 13 Remaining Days Combined.
Eight Steps For Driving A Stake Through The Heart Of Bureaucracy.
Trade Like A Hedge Fund: Best Investment Book Of The Year.
Year’s Top Investment Books.
A Powerful New Tool For Almanac Investors.
Most Of The So-Called “January Effect” Takes Place In The Last Half Of December.
Trading The Thanksgiving Market.
Wall Street’s Only “Free Lunch” Now Served At Year-End.
January Effect Now Starts In Mid-December.
If Santa Claus Should Fail To Call Bears May Come To Broad & Wall.
Sector Seasonality: Selected Percentage Plays.
NASDAQ Composite Market Probability Calendar 2005.
Dow Jones Industrials Market Probability Calendar 2005.
S&P 500 Market Probability Calendar 2005.
Recent S&P 500 Market Probability Calendar 2005.
2006 Strategy Calendar.
Decennial Cycle: A Market Phenomenon.
Presidential Election/Stock Market Cycle The 171-Year Saga Continues.
Bull And Bear Markets Since 1900.
DIRECTORY OF TRADING PATTERNS & DATABANK.
A Typical Day In The Market.
Through the Week On A Half-Hourly Basis.
Monday Now Most Profitable Day Of Week.
NASDAQ Days Of The Week.
S&P Daily Performance Each Year Since 1952.
NASDAQ Daily Performance Each Year Since 1971.
Monthly Cash Inflows Into S&P Stocks.
Monthly Cash Inflows Into NASDAQ Stocks.
November, December, And January — Year’s Best Three Month Span.
November Through June — NASDAQ’s Eight-Month Run.
Standard & Poor’s 500 Monthly Percent Changes.
Standard & Poor’s 500 Monthly Closing Prices.
Dow Jones Industrials Monthly Percent Changes.
Dow Jones Industrials Monthly Point Changes.
Dow Jones Industrials Monthly Closing Prices.
NASDAQ Composite Monthly Percent Changes.
NASDAQ Composite Monthly Closing Prices.
Best & Worst Dow Days.
Best & Worst NASDAQ Days.
Best & Worst Dow Weeks.
Best & Worst NASDAQ Weeks.
Best & Worst Dow Months
Best & Worst NASDAQ Months.
Best & Worst Dow & NASDAQ Years.
STRATEGY PLANNING & RECORD SECTION.
Portfolio At Start Of 2005.
Interest/Dividends Received During 2005/Brokerage Account Data 2005.
Portfolio At End Of 2005.
Weekly Portfolio Price Record 2005 (First Half).
Weekly Portfolio Price Record 2005 (Second Half).
Weekly Indicator Data 2005.
Monthly Indicator Data 2005.
If You Don’t Profit From Your Investment Mistakes Someone Else Will/Performance Record Of Recommendations.
IRA: Most Awesome Investment Incentive Ever Devised.
Top One Hundred-Forty Exchange Traded Funds.
G.M. Loeb’s “Battle Plan” For Investment Survival.
G.M. Loeb’s Investment Survival Checklist.
J.P. Morgan's classic retort "Stocks will fluctuate" is often quoted with a wink-of-the-eye implication that the only predication one can make about the stock market is that it will go up, down, or sideways. Many investors agree that no one ever really knows which way the market will move. Nothing could be farther from the truth. We discovered that while stocks do indeed fluctuate, the do so in well-defined, often predictable, patterns. These patterns recur too frequently to be the result of chance or coincidence. How else do we explain that since 1950 practically all the gains in the market were made during November thorough April compared to almost nothing May through October? (See page 50)
The Almanac is a practical investment tool. Its wealth of information is organized on a calendar basis. It alerts you to those little-know market patterns and tendencies on which shrewd professional enhance profit potential.
You will be able to forecast market trends with accuracy and confidence when you use the Almanac to help you understand:
§ How our presidential elections affect the economy and the stock market - just as the moon affects the tides. Many investors have made fortunes following the political cycle. You can be sure that money managers who control billions of millions of dollars are also political cycle watchers. Astute people do not ignore a pattern that has been working effectively throughout most of our economic history.
§ How the passage of the Twentieth Amendment to the Constitution fathered the January Barometer. This barometer has an outstanding record for predicting the general course of the stock market each year with only five major errors since 1950 for a 90.7% accuracy ratio.
§ Why there is a significant market bias at certain times of the day, week, month, and year.
Even if you are an investor who pays scant attention to cycles, indicators and patterns, your investment survival could hinge on your interpretation on one of the recurring patterns found with these pages. One of the most intriguing and important patterns is the symbiotic relationship between Washington and Wall Street. Aside from the potential profitability in seasonal patterns, there’s the pure joy of seeing the market very often do just what you expected.