1st trading of year (S&P 500)
The average first day gain over the past four years has been 1.8 percent. Almost exactly what the S&P is up Wednesday.
Of course, a lot of these old trading rules don't work so well any more. Consider two old chestnuts: "Sell in May and go away," and the "best time to invest" scenario.
Problem is, these didn't work very well last year.
"Sell in May," which would argue that you begin selling stocks in May and stay away from June through September, was not a winner: Stocks bottomed toward the end of May. The third quarter was up 6 percent, the best quarter of the year.
What about "best time to invest," which argues that the best time to get into stocks is during the period from October to December, because November and December are among the biggest months of the year?
Nope. The fourth quarter was DOWN 1 percent!
You can't even rely on old chestnuts any more.
Why Many Investors Are Selling Today's Big Rally
1) Solar stocks like LDK Solar, Suntech , and Renesola, are up strongly Wednesday. Buried in the fiscal cliff bill was a Production Tax Credit Extension for new renewable wind plants. There's also a Biodiesal Tax Credit that helps companies in renewable energy resources.
While there are no specific provisions exclusively for solar companies, it seems that traders are extrapolating further—that green energy will see no government subsidy cutbacks.
2) A number of retailers are trading down Wednesday. This makes some sense: higher payroll taxes impact discretionary spending. Also, I think comps are much tougher this quarter (January 2012 was strong due to warm weather). Finally, a number of retailers (Kohl's, even Target) had bigger markdowns going into the end of the year than anticipated.
3) The battle for listings between the NYSE and NASDAQ continued in 2012. Listing fees are an important part of the revenue stream for both NASDAQ and the NYSE. Both get roughly 20 percent of revenues from listing fees, the largest single component of revenues.
Pat Healy, who advises companies on which exchange to list their companies, has come out with his "2012 Switch Scoreboard." Bottom line: NYSE wins on number of switches, NASDAQ wins on market cap.
Specifically: 7 companies moved from the NYSE to NASDAQ in 2012, 15 companies moved from NASDAQ to NYSE.
But on market cap, those 7 companies that moved from NYSE to NASDAQ represented $103 billion in market cap; thee 15 companies that moved from NASDAQ to NYSE represented $22 billion in market cap.
Healy concluded by noting two notable trends:
"1) Nasdaq is landing significantly larger but fewer switches due to its lower fee structure and co-branding incentives.
2) The NYSE is attracting a greater number of companies, albeit significantly smaller, most of which are (among other considerations) attracted to the historical NYSE brand advantage without experiencing a fee increase."