In December of last year I wrote about the Santa Claus rally. It’s this interesting occurrence when the stock market rallies during the holiday season. Based on statistics and historical data the Dow Jones grew 80% of the time during this period, and the S&P500 gained 1.5% on average. Of course swing trading is risky, and there are no guarantees you’ll make money. But if you’ve bought stocks and then sold them during this Santa Clause rally in the past, then 8 out of 10 years you would have made money on the index, for example, by buying the etf DIA, which tracks the Dow :0) Don’t know about you but that sounds like some pretty good odds to me. So on Dec 21st, I spent about $3000 to buy some Amazon and Bank of America stocks and hoped the overall market would rise and carry my stocks with it so I can make a quick profit 😀
After the Santa Clause rally however, the stock market continued to climb. Must be the January effect, which I’ll explain in another post. No point selling on an uptrend they say. But earlier today I didn’t like how my 2 stocks were performing so as I’ve already mentioned on Twitter, I sold both and completed my swing trade. In the end I’ve made $140. Mission complete. This swing trade was a success :0) That’s a 4.6% return in roughly 1 month. Not too shabby.
Initial Investment: $2975.70
Fri, Dec 21st, 2012
Bought: 6 shares of AMZN.Q at $257.23 = $1543.38
Bought: 128 shares of BAC.N at $11.19 = $1,432.32
Total money spent buying stocks: $2975.70
Today, Monday, Jan 28th, 2013
Sold: 6 shares of AMZN.Q at $280.27 = $1681.62
Sold: 128 shares of BAC.N at $11.52= $1474.56
Total money earned from selling stocks: $3156.18
Commission: 4 trades x $9.99 = -$39.96
Net profit after expenses: $140.52 (pre-taxes)
So not a whole lot, but enough to buy another can of sturgeon roe haha. But most likely I’ll use the money to cover the commission on my next 14 trades :0) I think both Amazon and BoA will continue to grow their businesses in the long term, but I’m not sure about the short term risks they’re facing so that’s why I sold. I mentioned my exit strategy going into this swing trade from the start, and I stuck to my plan 🙂 A small profit is still better than nothing lol.
Best part about this particular swing trade strategy is that it’s based on a reoccurring annual event, the Santa Claus rally, which just to be clear is not guaranteed to perform well every single year, but based on historical evidence, does so most of the time （＾ｖ＾）I’ll definitely be doing it again at the end of this year.
Random Useless Fact: The surrounding temperature around a person can affect his or her appetite. A person in a colder room is likely to eat more than if that person was in a warmer room.