Money clearly flows into the stock market during the end of one month and the beginning of the next.

What’s the best way to exploit this bullish pattern? Of course, you could buy on the last day of the month and sell one day later. This approach isn’t necessarily a bad idea, but it ignores risk; when the market can swing roughly 10 percent in either direction in a single day, as it did in October 2008, adding stop-loss rules is a prudent step.

The following analysis begins by assessing the simple first-day-of-the-month buy rule and then examines the best time to exit the market and how to improve results by adding profit targets and stop-loss points. The discussion also focuses on how the system has reacted in different market phases — bull and bear periods and volatile and calm stretches — over the past two decades.