How To Trade Stocks Correctly During Repeatable Patterns
This year, the cyclic market trends were a bust. Most just did not pan out.
Then again, this really is not anything new. If you do a 25 year graphic representation on the main indices, you will find out that some years basically do not happen as expected. However what you will also understand is that in the majority of years, they typically do.
What does that represent for us going into 2010?
It means that 2009 was one of those unusual years where seasonality did not work meaning that in 2010, seasonality will in all probability work again.
The first seasonal trend will be upon us in just a couple of weeks, so let’s do a quick review.
The stock market has comparatively consistent and dependable recurring trends. You ought to be familiar with the most well-known cyclic trends, since this information can stop you from being extremely bullish at a cyclic peak or excessively bearish at a seasonal low.
In a nutshell, the common trends support a turn down in early January (possibly profit-taking selling), followed by a mid-January rally. By late March or early April the market often reaches a peak, followed by a changing market in mid-April, maybe related to the April 15 tax deadline. The early summer months are frequently characterized by a midsummer rally, culminating in a market top in late July or early August. September and October are normally down months in the stock market (witness the 1929 Crash and the 1987 October decline), with the lows occurring sometime in late October (a good buying opportunity?). The trend into the end of the year is typically bullish, with the first two weeks in December characterized by a strong market. The Christmas holidays are typically calm, with irregular and thin markets. There are continually exceptions to these actual trends, but the general pattern is remarkably reliable.
Print this article if you have to and stick it near your trading monitor. I think that because 2009 was a unusual bust for a good number of the cyclic trends discussed above, 2010 will be an on year. One of the biggest errors amateur traders make is that they get sniped by more sophisticated fighters who know the seasonality trends.
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