Trading Strategies

Just a follow-up on the trading strategies discussion from earlier when I promised "more later." The market has had a nice run the past week or so. If you remember, many folks were extremely bearish in early May. So, lets look at a few trading strategies that may have been in play this month:

* Many people think that options expirations weeks tend to trend up.

* Many people think that you want to be invested prior to holiday weekends.

* Many people think that you should be invested at the end of the month, and into the first few days of the next month.

In early May, we had an extreme level of pessimism for whatever reason. The seasonal "sell in May" investors might have been planning their summer getaways. But if you are a contrarian investor, you would be looking for this if you yourself weren't caught up in the emotion. And that itself is a difficult thing. But those three catalysts I list above are not to be taken lightly. Were institutional investors and large money players trying to game these three things?

Just for your consideration. It certainly may not work again next time. But it's out there next time we're heading into potentially positive catalysts. I think it's a good idea to always be aware of extreme sentiment swings, and we had bear claws all over the place just over a week ago. Now that's moving in the other direction, as folks who missed the move are trying to play catch up and salvage something out of this move.

Hey, it's always easy to offer up analysis in hindsight, eh?