What Index Has a 100% 11-Year Track Record Over the Next 4 Weeks?

In the August 8th Seasonal Forecaster I showed the seasonal pattern for the NASDAQ Composite, focusing on the 5-week period. Over the 5 weeks from the second week of August, the NASDAQ Composite has averaged a 2.9% gain, with gains in 19 out of 23 years (75%).

This year, since the lows on August 7th, the NASDAQ has already gained 4.9%, the S&P 500 has gained 4.6%, and the Russell 2000 has gained 3.9%.

I finished off that article by saying “Unless significantly negative news comes out to throw the market for a loop(meaning a sharp drop), the likely path from here is for a rebound. Like the February and May rebounds, a 10% rise in the major indexes could be in order.”

This week the NASDAQ broke above recent resistance.

Is it nearing (or at) a short term high, or can we expect more gains in the near term?

There aren't many clues in the price chart or volume pattern (except the Stochastics on the Composite's daily chart is in overbought territory and may be crossing over).

How about seasonals?

Looking at the track record for the next 4 weeks, the Composite has gained an average 1.0% with gains in 18 out of 24 years (75%):

But look more closely. Markets, as well as stocks, can change over time. With seasonal analysis, it sometimes is better to put greater emphasis on the more recent years. Focusing on just the last 11 years, the Composite has gained an average 3.8% over the next 4 weeks, with gains in 10 out of 11 years (91%).

If anyone is interested in playing this possible move, the ETF based on the NASDAQ Composite, PowerShares QQQ (QQQ)  can be an easy way to get into the game. In the past 11 years, QQQ has gained 3.6% over the next 4 weeks, with only one losing year.

The Russell 2000 actually has a better 11-year track record over the next 4 weeks. It has gained an average 4.6% with gains in all 11 years (100%).

The iShares Russell 2000 Index Fund ETF (IWM) can be used to make bets on the Russell 2000's move.

Both QQQ and IWM have actively traded options. But beware, this summertime low volume market can be quite susceptible to news events and corporate announcements.

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) 2014 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.

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