Sunday, February 15, 2009

S&P 500 on a Five Month Rally? Just Ignore the First Half of Each Month

From EconomPic:
Equity markets continue to act wildly different in the first half of each month than the second. As I detailed back in December, this is in part due to rebalancing of large pension plans back to equities towards month-end (as markets have sold off, allocations to equities have become smaller than policy, thus they rebalance from better performing assets).

Going back to September, we see five consecutive months where this has been the case (by more than 5% in each instance).

Keeping in mind the old trader's saying:
"As soon as you think you've found the key, they go and change the lock",
EconomPic is, as one commenter noted "...the only site [where] I've seen this mentioned..."