Chart Talk {09.24.15}

"Sell Rosh Hashanah, Buy Yom Kippur" is one of those old Wall Street saws that more or less has proved out over the years.  Rosh Hashanah is the Jewish new year and Yom Kippur is the Jewish Day of Atonement.  Why this has worked is a source of endless debate.  The most likely reality is that the period always coincides with a cyclical period of market weakness.  

Nevertheless over the years following this advice would have theoretically saved an investor a bit over 1%.  I say theoretically because the impact of trading costs and taxes would likely mean your return would have been smaller if you followed this advice.  Also it's fair to point out that this strategy hasn't always made investors a profit.  Anyway in the chart above of SPY I've circled the respective dates for 2015.  Following this strategy would have theoretically saved an investor about 1.25%.  The more interesting statistic would be to follow what happens if you buy Yom Kippur and hold till the end of the year.  My guess is that system is a winning strategy in most years.  Maybe I'll test that at some point.  

I am out tomorrow and Monday so the next post here will be either Tuesday or Wednesday unless I feel the need to break in.

The original unannotated chart of the SPY  is from Stockcharts.com.  

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.