As of 01/20/2021   Indus: 31,188 +257.86 +0.8%     Trans: 13,126 +225.85 +1.8%     Utils: 865 +7.27 +0.8%     Nasdaq: 13,457 +260.07 +2.0%     S&P 500: 3,852 +52.94 +1.4%	YTD  +1.9%    +4.9%    +0.0%    +4.4%    +2.6%	Targets    Overview: 01/13/2021     32,000 or 29,600 by 02/01/2021   13,500 or 12,300 by 02/01/2021   890 or 800 by 02/01/2021   13,500 or 12,400 by 02/01/2021   3,900 or 3,625 by 02/01/2021
CPI (updated daily): on 11/2/20

As of 01/20/2021   Indus: 31,188 +257.86 +0.8%     Trans: 13,126 +225.85 +1.8%     Utils: 865 +7.27 +0.8%     Nasdaq: 13,457 +260.07 +2.0%     S&P 500: 3,852 +52.94 +1.4%	YTD  +1.9%    +4.9%    +0.0%    +4.4%    +2.6%
Targets    Overview: 01/13/2021     32,000 or 29,600 by 02/01/2021   13,500 or 12,300 by 02/01/2021   890 or 800 by 02/01/2021   13,500 or 12,400 by 02/01/2021   3,900 or 3,625 by 02/01/2021
CPI (updated daily): on 11/2/20

Bulkowski on the Optimum Trading Hold Time

This article discusses how long you need to hold onto a stock to make a profit, based on the performance of a market index.

To make money, how long should you hold onto a stock? I'll give you the probabilities in a moment, but here's how I did it. I downloaded the daily, weekly, and monthly price data from yahoo finance using the S&P 500 index and then went to work. The data ranges from January 3, 1950 to April 13, 2010. For the computation, I used overlapping periods. For one year, as an example, I determined whether price closed higher from April 1, 2010 to May 1, 2009. Then I used the next month, March 1, 2010 to April 1, 2009, and so on. I summed the number of up closes compared to the number of samples and found the percentage.

In other words, I counted the number of times price closed higher for each period. The table below shows what I found.

For example, if you bought the S&P 500 index and sold it a day later, you would have a 53% chance of making money -- all else being equal. If you hold onto the index for a week, the probability of a gain rises to 56%. Hold for 5 years, and the probability rises to 83%.

If you are having problems making money in this market, then consider holding longer. Or just buy low and sell high.

-- Thomas Bulkowski

 

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