A belated Happy Jewish New Year! We wish you all success, health and happiness. With Labor Day and Rosh Hashanah falling in the same week the year schools in our area did not open until today. So we brought in the New Year with the kids down the Jersey Shore – truly endless summer for us this year. My only regret was there was not much of a swell to surf this week.
In our absence much was written and discussed of the market’s tendency to be softer from Rosh Hashanah to Yom Kippur. As we approach the seasonally treacherous September and October timeframe and with the market rallying a bit off the August lows we wanted to remind everyone of the official stats.
During the High Holidays many Jewish colleagues take off to observe the Jewish New Year and Day of Atonement and a many schools in the New York area and elsewhere close sometime during the holidays. With many traders and investors busy with religious observance and family, positions are closed out and volume fades creating a buying vacuum.
It’s no coincidence that Rosh Hashanah and Yom Kippur fall in September or October, two dangerous and opportune months. Passover conveniently occurs in March or April, right near the end of our Best Six Months Switching Strategy. Perhaps it’s Talmudic wisdom but selling stocks before the eight-day span of the High Holidays has avoided many declines, especially during uncertain times like 2008. Being long Yom Kippur to Passover has produced more than twice as many advances, averaging DJIA gains of 6.7 percent. This trade worked particularly well the last 4 years.
DJIA closed at 14937.48 last Thursday on the first day of Rosh Hashanah, about 400 points above where it closed the first day of Passover on March 26. As of today’s close DJIA was about 125 points higher. While this year the Sell Rosh Hashanah trade may not be perfect, early September strength is likely to yield to late month weakness.
By Jeffrey A Hirsch