The Second Half Of The Month Should Be Better

The bears have not done much with the overbought reading this week  but still have another week to try and send the market lower before the overbought reading is completely worked off. Other dynamics such as seasonality and insider selling allow for further downside into the middle of the month. I believe that a move lower into the middle of the month would be a buying opportunity as many of these same factors will turn positive at the end of the month.

InsiderScore.com is reporting extreme amounts of insider selling, especially among founders who own large stakes in companies. This is likely due to capital gains tax rising next year. While this selling is likely not related to fundamentals the additional supply of stock does not help. Towards the end of the month many company insiders will be in a blackout period as we approach quarter end so the selling from insiders should lessen.

The special dividend announcements have been coming in fast and furious. Most of these special dividends are scheduled to be paid in the latter part of the month. If  a portion of these dividends is reinvested it should be an incremental positive for the market.

A move lower into the middle of the month would make the market oversold, with seasonality turning positive in the latter part of the month and a slew of special dividends scheduled to arrive. The short term outlook remains iffy but it should get better once we get past mid month.

 

4 comments:

dadzers said...

FREILICH HANUKKAH TO GANZE MISPACHA !!!!!!!

steven said...

In my daily pursuit to bring order and justice to the world, I have stumbled upon an egregious price anomaly. To wit, I give you ISSC...The stock was trading in a range between $4.18 - $4.28 for a month before management announced last Friday a special cash dividend of $1.50 per share payable on Dec 27th to stockholders of record on Dec 17th.

Yesterday the stock saw huge volume (nearly 1200% above normal levels) and traded in a range of $5.00-5.35, closing at $5.10. Up approximately 22% in 3 days on announcement of a cash dividend!

How would you play it?

steven said...

ISSC's record date appears to be the 28th, not the 17th. They may have deferred the record date due to the size of the dividend...

steven said...

Innovative Solutions & Support, Inc. (ISSC) (the “Company”) today
announced that its Board of Directors has declared a special cash
dividend in the amount of $1.50 per share. The dividend will be payable
on or about December 27, 2012 to shareholders of record as of the close
of business on December 17, 2012.