The DOWNSIDE risk is high at this stage.

After poring through the charts of various bellweather US stocks like Merck, Google, Microsoft, Disney and GE, I would say the equity market there has turned decidedly BEARISH, and will likely drag many global markets down with it.

Another even year to sell in May & go away?

Perusing various old charts that I had used in 1998-1999 to place wagers on the Malaysian equity markets that ultimately bought me freedom from employment for over two years, an idea struck me today:


What if the investment adage 'Sell in May and Go Away' holds true this year?

I perused my old charts that dated back to the late 1980s in some cases and noticed that the durations between the peaks from 1987 to 2000 averaged 3-4 years give or take a couple of months : 1987, 1990, 1994, 1997, 2000.

In the new millenium, the pattern changed slightly, with the peak in most second-liners occurring in late 2003 after a speculative frenzy from April to November of that year, making the first peak-to-peak duration roughly 3.8-4 years in duration.

Then came the 2007 peak(most Malaysian stocks peaked in June-July 2007), making the second peak-to-peak duration of the millenium about 3.5-3.7 months.

If we project that to the current timeframe, this places the next peak at roughly 3.5 to 4.0 years after June-July 2007, which forecasts an imminent selling target of end-2010 to mid-2011.

Conservative investors may recycle the old average of 3-4 years and place their sells squarely in the May-June 2010 timeframe.

Additionally, selling in May & avoiding the Malaysian equity market seemed to be profitable in 1988, 1990,1991, 1992, 1994, 1996, 1998, 2000,2002, 2004,2006 and 2008!

Yup. You begin to notice the preponderance of even-numbered years in that list!


In 1998, I prepared a one-page analysis projecting a bottom in the Malaysian equity market at 'between Aug-Sep' that year, due to a 8-9 month duration between bottoms that held in the 1990s.

As it turned out, the Kuala Lumpur stockmarket bottomed on September 1st 1998.
Unfortunately, I'm unable to locate that particular analysis among the many investment detritus shuffled & scattered by the passage of time...


But the bottom line is : Equity markets have become soft(and even downright dangerous) in the even-numbered years for the past two decades.

So 2010 may indeed prove to harbour a risky equity market from as early as March of this year!

S&P 500 Index looks poised to head towards 1150.

The major downtrend line seems to have been breached (finally!), despite the disappointing job loss numbers on Jan 8th.

Now we can look forward to the possible inverted head & shoulders target of 1225 points.

But before that, I surmise that the index faces a moderately tough resistance at 1150 points, established by the turning points in the market in 2001-2002 and the support-turned-resistance in 2005.

My trading positions in the US markets heading into 2010