Chapter IV: The Traditional Seasonal Analysis of Price Trends can still yield valuable predictive information. |
| Prev. Co. | Next Co. | |
|
| ||
| A non-typical Seasonal Pattern is shown by American Airlines. For the average common stock, low prices are most likely previous to the month of November. Averaged over the last 26 years, ZAP exhibits a strong spread between the high and low months of 12.74 percent. For this chart, price plots for each year are traced on top of each other. Each month's value is adjusted to the mean price for the particular year. The orange line represents the average monthy price expressed as a portion of the annual price. |
| Prev. Co. | Next Co. | |
| ||
| Investors in American Airlines should consider staying in cash during October. Here, the profitability of the month is defined as the percentage change between the mean price on the first day of the month and the mean price on the last day of the month. So the figures displayed here refer to the average change during each month, rather than changes between months. By this measure, the month of January appears favorable, offering a quick return averaging 43.43 percent. |
| Prev. Co. | Next Co. | |
| ||
| The 'Monthly Profitability' discussed above applies to holdings during the course of a single month. Another, perhaps more realistic evaluation is the one charted here. Here the value evaluated is the highest price reached at anytime during the next quarter. Investors shrewd enough to invest in American Airlines during December have seen an average maximum gain of 70.98 percent at some time in the following 60 trading days. |
| Prev. Co. | Next Co. | |
| ||
|
This plot of the average monthly price as a proportion of the average yearly price removes the year-to-year secular trend. However the within-year trend is still intact, so it is expected that the December value might be higher than the January average, for a healthy company. Over the span of 5 months from November to April a gain of 12.74 percent has occurred historically. This is an annual rate of 30.6 percent. Investing 'against the tide' of the seasonal trend can cost an annualized 21.84 percent. Before making any decisions based on the standard 12 Month Seasonal Calendar, be sure to check the characteristics of the 24 Month Political Election Calendar. Research shows that many characteristics of the traditional seasonal averages are actually induced by events in the 24 month political cycle, so the characteristics of even versus odd numbered years may be quite distinct. |
Much Deeper Market Timing Analysis with ZAP roadmap and Summary of most effective indicators: |
| In the news, Friday, March 12, 2010: An unfavorable condition has developed with Convergys Corporation, ticker symbol CVG. Also, there are breaking events concerning ConAgra Foods, Inc. (CAG) and Pre-Paid Legal (PPD) |