Pattern Recognition: Spotting Comeback Stocks : In 1884 Charles Dow published the very first stock market average composed of closing prices of eleven stocks: nine railroad companies and two manufacturing firms.
The closing price for many stocks was higher than either the price at which the stop-loss orders were triggered or the price realized on the sales.
Instead, like gamblers down on luck at closing time they buy risky stocks hoping to recover all losses.
But regardless of the reasons why, the intraday rally fizzled and stocks were sold into the closing bell Friday.
FORBES: Wall Street Continues to Upgrade Stocks Despite Economic Concerns
Stocks and bonds were the place to be for the closing decades of the 20th century.
People are yanking money from stocks and mutual funds, dumping their brokers and their banks, and closing credit cards in disgust.
FORBES: Occupy Wall Street Protesters Camped Out for a Month
Not even critics who complained that bailed-out banks were given free money by the Fed to generate fat interest spreads, then reinstated dividends to make their stocks rise in time for bonuses to be paid out, are saying anything about closing the barn door after the cows have gotten out.
FORBES: New Fed Regulation Takes 887,624 Hours a Year to Comply With
My proprietary analytics that generate value levels, pivots and risky levels are based upon the observation that nine years of closing price data assumes all possible reactions to both bullish and bearish events for all markets and all stocks.
From the closing price on Nov. 2nd, 2012 to the close of January 28th, 2013, the 5 stocks (MPC, LSI, JBLU, GLT and PSX) had an average return of 18%.
From the closing price of May 1st (when the article was written) to the close of November 2nd, the stocks had an average return of 12%.
Stocks like Caterpillar and Alcoa were mostly flat on the news, as the Dow moved up above its closing level yesterday, gaining 0.6% to 11, 968.
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