As swing traders we are focused on capturing short term momentum moves in stocks for profit, and the best tool for doing this at the end of the year is playing December seasonality. From 1950-2012, the average gain for the DJIA in December is 1.7%. This makes December the second best month to trade. This is a nice stat, but how do we supercharge our results and *beat* the market? Easy, by playing the “window dressing” game.
Put yourself in the shoes of a fund manager. These guys and gals are not only looking to make money, but also keep their clients happy. Clients aren’t looking at the future, they are fixated on the recent past. If stock X has been leading the market over the past few months, they expect the fund to be in it. For this reason, even if the fund didn’t participate in the stock’s run up, the fund manager will make sure to show his clients he is in that stock at the end of the year.
We understand the psychology behind this and are positioned to take advantage of the “December markups”. Last week we talked about trading the “FANG” stocks. Since that time, Facebook, Amazon, Netflix and GOOGL have had nice runs. I expect this to continue until the end of the year and will look for entries in these 4 stocks.
Keep December seasonality in mind when swing trading toward the end of the year. If you have any questions, or want to learn how to swing trade like I do, shoot me an email at firstname.lastname@example.org and I’ll help you out!
Better yet, come check out our FREE TRIAL for our Part Time Traders service. This service is great for those that work and cant monitor the computer all day. We have indepth nightly reports on the gameplan for the day/week and all stock picks that I trade will be alerted and emailed to you.