On Monday, in Which ETF Has a 100% Track Record?, I pointed out that one index ETF had a 100% track record of gains over the next 6 weeks. It was the SPDRs Dow Jones Industrial Average ETF (DIA).
I wrote “…if we get a good reversal day this week in the markets, and you feel an urge to take a chance on a major index ETF, DIA, a bet on the basic Dow Industrials, would be your best bet based on history.”
At the time, DIA was headed back towards its 50-day moving average, falling along with the rest of the market:
All the big traders must be reading my articles since a rebound started right at Monday's open. DIA is up 3.0% since then:
On Monday, I also commented “Options on DIA may be relatively cheap as DIA's IV would be close to 12-month lows”
At Monday's open, you could have considered a relatively conservative, in-the-money DIA March 165 call as an alternative trade. The DIA March 165 priced around 11.25 at that time.
As of Thursday's close, following DIA's 3% climb this week, that call is now up 30%. Another way to trade DIA's seasonal pattern would have been to buy a bull call spread. A long DIA Jan 170 call/short DIA Jan 175 call spread would now be holding a 27% gain.
I don't know how much further this rebound will go. In some stocks I see failure to break above resistance. But in other stocks, it looks like new buying is coming in. But at least DIA is off and running, and if the gains hold, DIA will improve its 6-week seasonal pattern to 18 gains in 18 years.
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
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