On Dec 31 I mentioned about watching one number, and since then Gold is probably the only major class that’s positive and beating the markets. Today we have another thing to watch.
There a famous saying “As goes January, So goes the Year” and there are multiple statistical evidences that support this theory. In fact, you will find that almost every seasoned trader is aware of this just like they are aware of “Sell in May and Go Away”. But if we go by the collective intelligence of “history repeats for itself”, then so many things should have been wrong including that house prices always goes up (and rating agencies giving solid ratings to subprime assets). I can go on and on, but the point I am making is this-
“Ignore the past and you lose one of your eyes, live in the past and you will lose both” (I can’t recall right now who said this)
So while it seems unlikely that we’ll end January on a positive monthly note (anything is possible though), that doesn’t necessarily means that we’ll end 2009 on bearish note. It just that data points till date favors a down year. So if you were planning to design strategies based on a bearish bias for the year, you may want to give a 2nd thought, what if this turns out to be a bullish year?
Have fun, profitable trading, OP