Commodity Trader's Almanac 2O11

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LAST-HALF OF JULY SHORT S&P 500

Active traders looking for a high probability play should pay heed to this potential market

move. Sell the September S&P 500 on or about July 15 and hold until on or about July 26. This

trade has a 67.9% success rate, registering 19 wins against 9 losses in the last 28 years. The

best win was $19,150 in 2002, and the worst loss was in 2009, posting a $12,650 bereavement.

Looking at the chart on page 140, you will

see the average price tendency is for a mid-

summer sell-off. Part of the reason is perhaps

due to the fact that July starts the worst four

months of the year in the NASDAQ and also

falls in the middle of the worst six months for the

Dow and S&P 500 indices.

Mid-July is also when we typically kick off

earnings season, where a strong early month rally

can fade, as active traders may have “bought the

rumor” or bought ahead on anticipation of good

earnings expectations and then turn around and

“sell the fact” once the news hits the street.

Watch for an early month rally, and pay close

attention, especially if we trade near the monthly

predicted resistance level using Pivot Point analy-

sis (2010 edition, pages 6–9). Market conditions

that tend to start out strong early in the month tend

to fade towards the middle to end of month. S&Ps

sold off early in July the past two years, creating

losses for this trade two years in a row. However,

using the timing tools detailed on pages 6–9 in

this edition and last year’s could have turned those

losses into profits with a little extra effort.

Active traders can also consider the elec -

tronic e-mini Futures (ES), and stock traders can

use the exchange-traded fund SPDR S&P 500

(SPY) and/or trade options on any of these equi-

ties. See pages 133–138 for additional correlated

trades.

ENTRY EXIT PROFIT/

YEAR DATE CLOSE DATE CLOSE LOSS

1982 7/15 113.50 7/26 111.20 $575

1983 7/15 165.15 7/26 171.40 –1,563

1984 7/16 153.65 7/25 150.35 825

1985 7/15 194.05 7/24 191.90 538

1986 7/15 235.05 7/24 238.40 – 837

1987 7/15 312.20 7/24 310.30 475

1988 7/15 272.80 7/26 266.15 1,663

1989 7/17 335.60 7/26 340.60

–1,250

1990 7/16 372.30 7/25 359.65 3,163

1991 7/15 384.50 7/24 380.75 938

1992 7/15 417.20 7/24 411.25 1,488

1993 7/15 449.75 7/26 449.05 175

1994 7/15 454.80 7/26 453.95 213

1995 7/17 565.45 7/26 564.05 350

1996 7/15 630.25 7/24 630.70 –113

1997 7/15 931.75 7/24 945.85 –3,525

1998 7/15 1183.40 7/24 1147.40 9,000

1999 7/15 1419.40 7/26 1354.80 16,150

2000 7/17 1522.00 7/26 1469.00 13,250

2001 7/16 1210.50 7/25 1191.50 4,750

2002 7/15 920.60 7/24 844.00 19,150

2003 7/15 1000.90 7/24 980.30 5,150

2004 7/15 1103.40 7/26 1082.90 5,125

2005 7/15 1231.20 7/26 1235.00 –950

2006 7/17 1240.50 7/26 1273.20 –8,175

2007 7/16 1559.70 7/25 1524.70 8,750

2008 7/15 1211.50 7/24 1253.80 –10,575

2009 7/15 927.20 7/24 977.80 –12,650

28-Year Gain $52,088

JULY SHORT S&P 500 (SEPTEMBER)

TRADING DAY: 10—HOLD: 7 DAYS

Chart courtesy TradeNavigator.com

S&P 500 (SP) BARS AND SPDR S&P 500 (SPY) CLOSES

(WEEKLY DATA JANUARY 2009–MAY 2010)

S&P 500 Seasonal Pattern since 1982

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MONDAY

4

TUESDAY

5

WEDNESDAY

6

THURSDAY

7

FRIDAY

8

SATURDAY

9

SUNDAY

10

Nothing gives one person so much advantage over another as to remain

always cool and unruffled under all circumstances.

— Thomas Jefferson (3rd U.S. president, 1743–7/4/1826)

We will have to pay more and more attention to what the funds are doing. They are

the ones who have been contributing to the activity, especially in the high-fliers.

— Humphrey B. Neill (Investor, analyst, author, NY Times, 6/11/1966, 1895–1977)

I’ve learned that only through focus can you do world-class things, no matter how capable you are.

— William H. Gates (Microsoft founder, Fortune, July 8, 2002)

Unless you love EVERY BODY, you can’t sell ANY BODY. — (From Jerry Maguire, 1996)

Don’t be the last bear or last bull standing, let history guide you, be contrary to

the crowd, and let the tape tell you when to act.

— Jeffrey A. Hirsch (Editor, Stock Trader’s Almanac, b. 1966)

Independence Day

(Market Closed)

End Long Cocoa(U) (Jun. 2)

JULY

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