Steve Place, friend of iBC asked,
Is the EOM/EOQ markup just a myth?
Strategy: buy the 5 largest gainers in the QQQQ 5 days before month’s end, sell on the 1st. Any edge?
Steve wasn’t very specific when he said to “buy the 5 largest gainers.” I’m hoping he’ll stop by and elaborate a bit more in the comments section about how he would quantify the 5 largest gainers. By that day? The past week? The past month or year?
The code is set up and ready to go.
I’m interested in hearing what the rest of you think about this setup. Will it work? What would you do differently?
Next post in this series is here: End-of-Month Markup and the Nasdaq 100
The results should be of interest to everyone!
If anything, I’d bet the opposite but I can’t imagine much of a consistent edge to such a simple system.
Do note that I’m not trying to find a trading system here, so the robustness of the study isn’t the main point.
I want to see if the “less stupid” trade actually occurs EOM or EOQ. Many believe that a few days before a fund posts performance and holdings it will accumulate certain securities to look “less stupid.” So we would assume the strength begets strength and there is a final push in some of the better looking names.
It’s tough to define the input parameters. A quick and dirty solution would be to look at the top 5 or 10 stocks in the NDX 100 that had the best performance over a particular time horizon, and compare their performance 5 days prior to EOM or EOQ relative to the index. YTD gains would probably be the best for this scenario. A more detailed study would analyze volume and performance of momentum names, maybe pulling from the IBD 100 or something similar.
I’ve yet to see quantifiable evidence that this markup exists, although it sure felt like it 2 weeks ago.
Steve, I’ve the code all set to go for EOM, so we’ll look at that first.
More than anything, I wanted to know exactly how you would select the stocks to be bought. We’ll start with YTD gains, but to make it simple, I won’t start the lookback at 1/1/XX, but instead will lookback 252 days from the date of proposed buy.
Of course in order to determine if there is an edge, we’ll have to look at buying on any given day of the month and holding for 6 days.
probably for institutional buys, eoq would have a better out come.James Altucher came up with the same thing a few years ago.he has had success in that strategy,and had a formula for the way he did it.which seems exactly what your explaining.i have never tried it.i would paper trade it first,to see if his thesis is still intact.now how you approach the buy is in your style of trading,ops,the issue,an etf,, etc……