It seems that everyone is writing about this market phenomenon over the past week so I figure I will join the party but structure my article with statistics using the help of the Stock Trader’s Almanac written by Jeffery A. Hirsch and Yale Hirsch.

For the record, I am not selling just because the calendar says May. I just wanted to shed some light on the statistical data as it interests me

Worst six months of the year begin in May:
* All data is from the DJIA from 1950 to 2005

• A $10,000 investment in the DJIA compounded to $544,323 for the period beginning in November through April over the past 56 years (termed the best six months)
• Compare this to a $272 loss; yes I said loss for the same investment in May through October (termed the worst six months)
• 44 of the 56 periods ended with a gain in the November through April period
• Only 33 periods ended with a gain versus 23 losing periods in May through October
• The average gain for the November through April period is 7.9% (56 yrs)
• The average gain for May through October is 0.3% but the period did have an overall loss of $272 as mentioned above
• The best six months gained 11,691.79 Dow points over the 56 yrs (data ends in 2005)
• The worst six months actually lost 538.98 Dow points

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Stock of the Day
Maidenform Brands
Friday’s Intra-day Price: MFB - $20.77

Next Earnings Date: Wednesday May 9, 2007
Sector: Consumer Discretionary
Industry: Apparel, Accessories & Luxury Goods
52-wk Range: $24.49 - $11.11

So what do we have? The technical aspects of this company look excellent with the ideal entry right now at the 200-d moving average. The stock has held the line as support two times over the past several months and looks to be a solid long term young stock. The strongest growth stocks are usually within 3-5 years of their IPO and MFB fits this criterion by debuting less than two years ago.

However, earnings are due to be announced next week and based upon Under Armour’s (AU) recent disappointment, I would be cautious. As of this writing, I have not added shares and do not own the stock personally. I will setup my risk-to-reward ratios this weekend and make the decision heading into Monday morning’s opening. I want to own the stock and now is the ideal point to accumulate shares but earnings scare me.

I don’t need to get caught in a severe gap-down that completely screws my risk factor and blows past my stop. If UA reported better expectations, I would be all over these shares right now. Other than that, the stock looks good heading into the future.

Institutional Analysis:
Held by Institutions: 70.59%
Money Market: 107
Mutual Fund: 161
Other: 8
New Positions: 62
Positions Sold: 21

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Stock of the Day - Update
Mastercard Inc.
Wednesday’s Closing Price: MA - $126.35

I highlighted Mastercard as a case study on April 2, 2007 in a post titled, Is Mastercard Priceless, while it was trading at $107.28. Closed at $126.35 yesterday!

Here are two quotes from that post one month ago:

• 4/2/07: “Longer term trend investors can establish a position now at the 50-d moving average or at least start to initiate a position by accumulating shares. Look for a confirmation on a move to the up-side above the trading range I have highlighted in blue on the weekly chart.”
• 4/2/07: “Bottom Line: MA is rated a buy in my book and I am grabbing shares today.
  *This blog post is not a recommendation to buy this or any other stock. Please do your own due diligence and buy and sell at your own risk!”

Now for the official reason why MA was up over 10% yesterday and has a 17% gain since the case study done on April 2:
First quarter earnings rose 70% boosted by higher gross dollar volume and a 19% jump in the number of transactions processed. The Purchase, N.Y., issuer of credit and debit cards and provider of a transaction authorization network reported first-quarter earnings of $214.9 million, or $1.57 a share, up from $126.7 million, or 94 cents a share, a year earlier. MasterCard said net revenue for the quarter rose 24% to $915.1 million from $738.5 million a year ago. Analysts surveyed by Thomson Financial expected, on average, earnings of $1.16 a share on revenue of $842 million.

As I mentioned last week – I sold my shares in Calpine after the candlestick reversal on the 24th. I was more concerned with my buy in BIDU so I never had the time to write a full post about Calpine (CPNLQ) but I did make sure I mentioned that I sold my shares in that post:

BIDU buy up 30% in two Days

4/26/07: “I sold my shares in Calpine but that may have been premature (190% gain). I will buy back into Calpine if it corrects and will let you know.”

The stock is getting slammed the past two days and actually reached an early intraday low of $2.95, almost a full $1 lower than my sell of $3.82 and far from the 52-week high of $4.15 made on the reversal last Tuesday. The reversal made my decision to sell on the candlestick charts!

It was an excellent trade, my best trade of the year, especially considering it was a piece of crap stock and trades below $10 per share (not my territory).

The chart shows where I bought, held and then sold – all based on technical analysis!

I’ve been tagged by my friends Kimber and Erin over at No Limits Ladies. Before I start, I must ask: Am I so serious that tagging may not be appropriate for me or this blog? I need to tone it down, loosen up and have some more fun if that is how I am viewed – just kidding ladies.

So here goes:

My Five Obsessions?
1. My Wife, Family & Friends
2. My Dog Bob! (now that’s a good looking dog)
3. The Stock Market
4. Blogging
5. Football and Baseball (watching and/or playing)

Five Reasons why I Blog?
1. It’s fun
2. I love to talk (write in this case)
3. Meeting new people (all over the world)
4. Educational: I learn from others and they learn from me!
5. It acts as a public journal (somewhat) for my research and trades.

I’ll tag a few people if Interested:

• Blain at Stock Trading 101
• Pradeep at Stockbee
• Tate at SelfInvestors (a new look for blog)
• Craig at Taz Trader Blog