Commodity Trader's Almanac 2O11

96

MASSIVE S&P 500 GAINS HALLOWEEN TO CHRISTMAS

Here it is folks, the beginning of the best six months of the year to go long equities.

October has been considered, on average, the best time to go long stocks with the

reputation of having tremendous crashes, “acting as the bear market killer”.

October has a spooky history that has scared many strong-willed and financially sound

investors and traders with the likes of the fabled Friday the 13th crash in 1989, or the

earlier double whammy, back to back debacles in 1978 and 1979. Once again, as an avid

futures trader who was around and trading during the crash in 1987, John can testify that

October can be a scary month, yet a lucrative one for the well informed trader.

As is published in the Stock Traders Almanac,

October can be a time to buy depressed stocks.

This may be what helps in this situation, going

long the March futures contract on or about

October 27 and holding until December 27. Once

again, due to the length of the holding period, we

have featured this trade entering the next-month

futures contract as opposed to the front-month

December contract, which one would need to roll

into the March contract due to expiration.

The success rate is a whopping 75.0%,

registering a cumulative gain of $216,038 per one

lot futures contract. This is the Commodity Trader

Almanac’s highest dollar amount winner by far. In

fact, even during the worst of times in 2008, we

registered a nice return of $7,825. The best gain was

in 1999 with a profit of $38,975, and the worst loser

was in 2000 with a loss of only $13,600. In the last

28 years, we have had 21 wins and only 7 losses.

This is a trade well worth considering, and of

course, there are several ways to participate:

full-futures contracts, the e-mini electronic

futures, the exchange-traded fund, SPDR S&P

500 (SPY), or in fact, devising a bullish option

stra tegy on these products. See pages 133–138

for additional correlated trades.

ENTRY EXIT PROFIT/

YEAR DATE CLOSE DATE CLOSE LOSS

1982 10/27 135.75 12/27 144.70 $2,238

1983 10/27 169.10 12/28 167.40

–425

1984 10/25 171.95 12/24 171.15 –200

1985 10/25 189.05 12/24 209.25 5,050

1986 10/27 240.05 12/24 248.30 2,063

1987 10/27 229.75 12/24 253.30 5,888

1988 10/27 282.15 12/27 280.00

–537

1989 10/26 343.65 12/26 350.45 1,700

1990 10/25 314.10 12/24 331.20 4,275

1991 10/25 387.60 12/24 400.90 3,325

1992 10/27 418.30 12/24 440.65 5,587

1993 10/27 466.65 12/27 471.65 1,250

1994 10/27 470.40 12/27 466.00

–1,100

1995 10/26 583.35 12/26 619.55 9,050

1996 10/25 711.75 12/24 759.05 11,825

1997 10/27 884.40 12/24 942.20 14,450

1998 10/27 1084.10 12/24 1239.50 38,850

1999 10/27 1321.90 12/27 1477.80 38,975

2000 10/26 1391.30 12/26 1336.90

–13,600

2001 10/25 1104.70 12/24 1147.20 10,625

2002 10/25 898.50 12/24 891.50

–1,750

2003 10/27 1029.20 12/24 1092.90 15,925

2004 10/27 1126.00 12/27 1208.40 20,600

2005 10/27 1189.70 12/27 1264.00 18,575

2006 10/26 1404.70 12/26 1428.80 6,025

2007 10/25 1534.90 12/24 1506.60

–7,075

2008 10/27 833.70 12/24 865.00 7,825

2009 10/27 1055.50 12/24 1122.00 16,625

28-Year Gain $216,038

OCTOBER LONG S&P 500 (MARCH)

TRADING DAY: 19—HOLD: 41 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

17

TUESDAY

18

WEDNESDAY

19

THURSDAY

20

FRIDAY

21

SATURDAY

22

SUNDAY

23

OE:

CL(X)

LT:

CL(X)

OE:

S(X)

With enough inside information and a million dollars, you can go broke in a year.

— Warren Buffett (CEO Berkshire Hathaway, investor and philanthropist, b. 1930)

Entrepreneurs who believe they’re in business to vanquish the competition are less successful

than those who believe their goal is to maximize profits or increase their company’s value.

— Kaihan Krippendorff, (Professor of entrepreneurship at Florida International University)

The dissenter (or “contrary investor”) is every human at those moments of his life

when he resigns momentarily from the herd and thinks for himself.

— Archibald MacLeish (American poet, writer, and political activist, 1892–1982)

A generation from now, A mericans may marvel at the complacency that assumed

the dollar’s dominance would never end.

— Floyd Norris (Chief financial correspondent, NY Times, 2/2/07)

It isn’t as important to buy as cheap as possible as it is to buy at the right time.

— Jesse Livermore (Early 20th century stock trader and speculator, How to Trade in Stocks, 1877–1940)

Start Short Yen(H)—61.8% Accuracy Since 1976—End Feb. 9 , 2012—Page 88

End Long Natural Gas(X) (Jul. 26)

OCTOBER

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