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How do they work? rekon = The stock market tends to move in cycles that are likely to repeat themselves in the future. * This is one of the pillars of technical analysis. * Healthy, Elficient markets are needed for seasonality trends to truly flourish. = Seasonality trends have been terrible signals over the past two years due to the extreme market conditions. @G_\_BIGTRENDSCommon Seasonality Trends Top Three * Using DJIA data from 1950 - 2009... = Traditionally Weak Months: May — October += Traditionally Strong Months: November — April Eke = Stocks tend to rally the last 5 days of the year and the first 2 in January. * If this rally does not take place, a potential bearish period is likely. oerou ree = The performance of the stock market in January can often predict the rest of the year. = Small caps often lead Blue Chips during this time, either bullish or bearish. @_BIGTRENDSittey 31.08 LNlev 30.01 Sell In May & Go Away »» a sean aif wan] 793 po Laer arya] saxon soeeze] 9 Best 6 Months w/o Indicators ees fete * Average Gain * Average Gain + 0.6% + 76% * Largest Winner + Largest Winner = 19.2% (1958) = 29.8% (1985) * Largest Loser = Largest Loser * -27.3% (2008) * 14.0% (1969) * Positive Periods + Positive Periods +37 = 45 * Negative Periods = Negative Periods +24 15 @_BIGTRENDSCurrent Sector Analy: Last Month’s Performance = Should we be concerned about the economy? = Outperforming: = Energy (9.27%) = Materials (8.03%) « Financials (6.94%) = Industrials (5.14%) = Underperforming: = Consumer Staples (-0.90%) * Utilities (-0.66%) @_BIGTRENDSCurrent Sector Analysis 52-Week Performance a eee = No sectors are down = Outpertorming: = Materials (44.84%) = Technology (44.28%) = Consumer Discretionary (36.43%) = Underperforming: = Consumer Staples (13.12%) = Energy (19.01%) * Utilities (4.32%) @_BIGTRENDSSanta Claus Rally Most Important 7 Days Boies cue = Time: last 5 days of the year and the first 2 days in the new year. = This rally takes place more often than not. = When it doesn't take place, it suggests weak market that could finish flat to lower in the new year. * Results from early to mid December can be misleading as portfolio managers te-organize their porttolios. @_BIGTRENDSSanta Claus Rally Statistics S&P 500 Index (SPX) * We analyzed recent bull and bear market years. = Data from 1999-2010 * During this period, the Santa Claus Rally rules held 10 out of 11 years. Most mportant 7 ays Fullcatencar Yast YoRetum 19535 aoa 23.37% 26.33% Naeoox 3.00% seas aoane 5.55% asa7% aaa Open Close %Retum Open Close 1218.54] 128473) © 132%|_1229.23] 1469.25] vasa.z4] azosaayy cow | aasa2s] 920. i7aa6|_1347 35] 370%| 132024] 1148.16] i1aao] 116527] 1 7e%| 114808] 675.22| 397.28) S0E.6INy 125% waei) 1111.02 Wowwse| tuis2] 2196 aui93] 12469] i2esas|_121152] 054%6|_aaitad] 1248.29] T2eea3| 1745] oaz%e| 228008] 1818.20] 1836.00] 145763] 137%6| 141805] —1468.26| iasaas| 147.15] -251%| 145807] 902.25] 362.75 is] 7s0e%|_ g9809] 11350] Taine] 43652] 13e%[ auase nial = 2001 was the year that bucked the trend. * Market performance during 7 key days only tells trend, not trend strength. + For Example... In 2004, the market rallied 2.14% during 7 key days, but the full year return was only 3.00%. @G_BIGTRENDS~Santa Claus Rally (SPX) Sk E b oa | a at oe ee et Hl T E TE = TF TE Ee z ‘bere "oo coSanta Claus Rally (SPX) fn Se i So pS — Set i ir Doane iE E Ez i fa z = oaThe January Effect Predict The Future bilo kee = Dow Jones Industrial Average vs. Russell 2000 = Actually starts in mid December. * This relative-strength comparison lasts from December 15th through January 31st. * If small caps lead the larger blue chip stocks, then the market is likely to remain strong. = Since Dec 15th, 2009, IWM +5.01% while DIA +0.48%. @_BIGTRENDSWhat to do.. When Seasonality Trends Don’t Hold True Eee = Remember, these seasonal trends may » work better in healthy markets = Focus on long-term moving averages for levels of support & resistance, in = Yearly Moving Averages: * First Areas to Watch + 5, 10, 20 years | _ = Next Opportunity Areas + 25, 30, 50 years * Avoid the 4 dangerous emotions when | seasonality trends break down — @%_PIGTRENDS |Dangerous Emotions The speculators deadly enemies are: “All the statue books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal.” @_8IGTRENDSThe 4 Fears Don't Let Them Creep In = Fear of Losing = Where is the Stop? Can you handle Exiting there? = Fear of Letting a Win Turn to a Loss = Small Gains and Big Losses — Follow the System = Fear of Missing Out = Greed = The ABSENCE of Fear = Fear of Being Wrong = Beware of “Analysis Paralysis” @_BIGTRENDS