The New-Month Massacre

On the SPX chart below, the purple arrows point to the first trading day of each of the last four months (click to enlarge):

All of them began badly. The first trading day of July finished up, but it opened on a large gap down and then rolled over the next day. This happens for a good reason: month-end mark-up. The big funds do their best to levitate the market at the end of the month to pump up their numbers. Then on the first day of the new month, they pull their bids, since we are in a bear market after all. Also, hedge funds do the bulk of their selling to meet redemptions during the first few days of the month.

Of course, on a day like today, not even the big funds can keep the market up. But the futures are up as I write this at 11:30pm, so perhaps the big funds are doing some buying to get some phony enthusiasim going for a bogus mark-up rally on Tuesday.

In any case, regardless of what happens on Tuesday, holding long positions over Tuesday night is probably not a good idea.

I made a couple of hundred dollars with a quick scalp from the long-side in the futures earlier. And now, just when I look up from writing this, I see that I missed another strong move up where I could have made a few hundred more dollars. Do you see the sacrifices that I make for this blog?

This entry was posted on Monday, September 29th, 2008 at 11:28 pm and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.