Summary:
The vast majority of stocks move in the same direction as the market. This page investigates the  likelihood of  individual
company stocks moving
countertrend to the market averages. A stock's movement is considered countertrend if it moves in
the opposite direction of the overall market. The 1/1/01 - 10/9/02 Bear market and the 10/9/02 - 12/31/04 Bull market are
analyzed below. The Dow Jones Industrials Average is the test index. A defensive strategy is presented as an alternative to
selecting defensive stocks.
BEAR MARKET TEST
(DJIA 1/1/01 - 10/9/02)
Return
Analysis
Dow Jones Industrials
Results
The Dow fell 32% from 1/1/01 through 10/9/02. The
individual components of the Dow are listed to the
right.

27 of the 30 Dow stocks fell during this period.
Only 3 of the 30 Dow stocks rose.

Stock Pickers Quagmire
Investors often pick defensive stocks when they are
concerned about a downturn. The odds of having
picked those 3 winners was 1:10. Granted, skill or
luck might have beaten those odds. But probably not
by enough to make a profit.

A defensive portfolio may outperform during a
downturn, but one can outperform the indexes and
still loose a lot of money. And it is highly unlikely that
a defensive portfolio will "make money" during a
Bear Market.

Follow the Trend
There is a favorable alternative to riding out the
storm with defensive stocks. By correctly identifying
the trend, one can 1) implement a Bullish portfolio
during Rising Markets and 2) use Inverse
Investments to make money during Falling Markets.
Easy to use investment tools are now available to
make money in down markets. Click the "How To
Invest" button on the top navigation bar to find out
how.
JPMorgan Chase & Co.
Hewlett-Packard Co.
SBC Communications Inc.
Intel Corp.
Honeywell International Inc.
McDonald's Corp.
Boeing Co.
Merck & Co. Inc.
Walt Disney Co.
General Electric Co.
Home Depot Inc.
American Express Co.
Alcoa Inc.
Citigroup Inc.
General Motors Corp.
IBM Corp.
United Technologies Corp.
Eastman Kodak Co.
Exxon Mobil Corp.
Caterpillar Inc.
E.I. DuPont de Nemours & Co.
AT&T Corp.
International Paper Co.
Altria Group Inc.
Coca-Cola Co.
Wal-Mart Stores Inc.
3M Co.
Microsoft Corp.
Johnson & Johnson
Procter & Gamble Co.
-64.90%
-62.05%
-57.17%
-56.46%
-54.99%
-50.09%
-49.61%
-48.98%
-48.64%
-47.99%
-47.67%
-46.51%
-42.34%
-41.48%
-36.50%
-34.39%
-33.06%
-27.06%
-23.34%
-23.12%
-20.39%
-20.29%
-16.66%
-14.85%
-13.11%
-4.93%
-1.72%
1.42%
12.81%
17.36%
BULL MARKET TEST
(DJIA 10/9/02 - 12/31/03)
Return
Analysis
Dow Jones Industrials
Results
The Dow rose 43% from 10/9/02 through 12/31/03.
The individual components of the Dow are listed to
the right.

28 of the 30 Dow stocks rose during this period.
Only 2 of the 30 Dow stocks fell.

Bearish Stock Pickers
Investors often sell a stock short when they believe
that it will fall. But they're in for trouble if the overall
market moves upward. The odds of having picked
those 2 loosers during that Bull market was 1:15.
It's possible that ,with skill or luck, those odds
might have been beaten. But would it have been a
wise bet?

It is highly unlikely that any bearish portfolio will
"make money" during a Bull Market.


Follow the Trend
When implementing any Bearish investment, it is
critical to correctly identify the overall market trend. It
is very difficult to invest counter-trend successfully.
Caterpillar Inc.
JPMorgan Chase & Co.
Intel Corp.
Alcoa Inc.
Hewlett-Packard Co.
United Technologies Corp.
Citigroup Inc.
General Motors Corp.
Honeywell International Inc.
American Express Co.
IBM Corp.
Walt Disney Co.
Altria Group Inc.
McDonald's Corp.
3M Co.
Home Depot Inc.
General Electric Co.
Boeing Co.
International Paper Co.
SBC Communications Inc.
E.I. DuPont de Nemours & Co.
Exxon Mobil Corp.
Microsoft Corp.
Procter & Gamble Co.
Merck & Co. Inc.
Wal-Mart Stores Inc.
Eastman Kodak Co.
Coca-Cola Co.
Johnson & Johnson
AT&T Corp.
153.70%
146.01%
139.30%
117.41%
110.21%
96.46%
86.19%
84.25%
80.58%
78.45%
69.88%
67.90%
60.53%
54.40%
54.22%
51.63%
45.78%
42.15%
41.76%
35.34%
32.61%
29.27%
25.50%
15.97%
10.84%
5.43%
4.69%
0.76%
-6.09%
-54.57%
Data was obtained from sources believed to be reliable but not guaranteed.
SignalTrend Inc. 2005 All Rights Reserved.
Terms of Use / Disclaimer        Contact Us
All Boats Rise & Fall With The Tide
(Current Issue of SignalTrend's Strategy Research)
SignalTrend

DJIA
Forecast
Signal 1900-1925
Signal 1926-1950
Signal 1951-1975
Signal 1976-2000
Signal 2001-2005
Historical Prices


S&P 500
Forecast
Signal 1950-1975
Signal 1976-2000
Signal 2001-2005
Historical Prices


NASDAQ
Forecast
Signal 1950-1975
Signal 1976-2000
Signal 2001-2005
Historical Prices


40 Year History
Prime Rate
Mortgage Rates
Treasury Rates
CD Rates
Signals the Trend... in Stocks and Interest Rates                  Backtested 100 Years !