Are Diamonds Your Best Friend?

The major indexes have staged breakouts that are hard to miss. Focusing on the ETFs that are easy to trade, the NASDAQ Composite, represented by QQQ, has marched upwards for 8 straight sessions, nearing the all-time highs set back in 2000:

The S&P 500, represented by SPY, set a new high:

The smaller cap Russell 2000, represented by IWM, squeezed out with a new high:

Same with the Dow Jones Industrial Average, represented by DIA (the ‘Diamonds'). The noticeable thing about DIA is it was the one that set new highs with above-average volume:

While I usually focus on stocks, I like to play a directional index trade every now and then, and clear breakouts like this are usually good trades. So which ETF would I pick?

Turning to seasonal analysis, in the search for which index has the best track record over the next several weeks, I discovered DIA actually has the best record.

Over the next 11 weeks, DIA has averaged a 4.1% gain, with gains in 14 out of the past 17 years. While the 3 losses were 5.2% or less, 5 of the gains were 7% or more:

If DIA produced gains this year, and were to match the average, a 4.1% gain over 11 weeks would work out to a 19.5% gain, annualized. If you are curious, QQQ has averaged only a 1.8% gain over the next 11 weeks, SPY averaged 2.6%, and IWM has averaged 3.2%. So if you are considering an index trade right now, going with the Diamonds seems to offer the best opportunity.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2015 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.

Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.

As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

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