The next post is not a prediction but just an observation of the markets from last year to this year. We are closing in on the end of the first month of 2013 and to look at the percentage gains for the month, it sure appears over heated. I mean look at those gains, 5.38% in the S&P 500 and the Small Cap 7.33%. Wow. No way this can be maintained because profits will be taken. This is what you would normally expect but could we prove that not to be true? Is there any data that would show that big monthly gains could be followed up with bigger monthly gains? Well we do not have to go far and this is the great thing about writing and keeping a blog. You can learn from past moves and compare data. Below is this years gains YTD 2013.
The above chart is from the end of month January 2012. Look at that, we almost repeated the same performance as this year. What’s more amazing is all the negative news we had last year in Europe and still posted those numbers. This year we have nothing as far as major news expect our own budget problems. So since we are starting to hear top calling and fear of 1500, what happen in February of 2012? Let’s look.
The above chart is February 2012. Well look at that and look closely at the monthly column. A high of 5.44% but all our important indexes, C,S, and I made 4.89 to 3.92%. Back to back great months. So there is no way that we could follow that up with another positive month, no way. The markets are going to take profits, right? I don’t know, let’s look.
The above chart is from March 2012. Well I’ll be damn. That makes 3 months in a row of some impressive gains and no profit taking. This is a little lesson on why you should make it a practice to have a reason to make a move. So I bet your curious about the moves I made for these 3 months of 2012. Well, I just happen to have that information also so let’s take a peek.
Look in the yellow area of the chart above. If you see anything other than a 0% in any of the columns, I’m invested. So for the first 3 months of the year I was 100% invested and only made one move to distribute some of my C monies into the I fund. Last but not least, let’s see what happened in April.
The above chart is from April 2012. Finally profit taking started and sometime during this mouth I did bail almost completely into safety of the G-fund. By the end of the month I was 75% G and 25% I. But the charts were saying bail and I bailed. Pretty simple. Below is a daily chart of the S&P 500 from 1/1/2012 until 4/30/2012. We did it with all the bad news in Europe and we did it with charts. History can sometimes be a great teacher but the real question is, do we learn?
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