Please explain how you create your seasonal charts, and correlated charts.
Gladly. What we do to create a seasonal chart is first take each year of stock data and normalize it to a scale of 0 to 100. We do this by finding the highest and lowest prices of the calendar year and normalizing each day's historical price to fit into that range. Then when we compute a seasonal, say a 10-year seasonal for instance, we take the last 10 years of historic stock price data, normalize it as described, and then average all past January 1sts, 2nds, 3rds, ... on through December 30s and 31sts to plot a single point for each date. There are other ways to compute seasonals as well, but we selected this one to make the trend the most clear.
The way we derive our correlated charts and the number of years to use in these charts constitute proprietary information arrived at from years of research. We can tell you that each "most correlated" chart is derived by selecting half of the years of data that goes into the main chart, and we compute the correlated chart from that set of data. Which half of the years? The half that look the most like the current stock's price behavior as measured by a complex, proprietary correlation formula. That's why our correlated charts are very accurate in predicting the near term stock trends, hard to duplicate by others, and why our forecasts for next months trends and turning points can vary on a monthly basis as we obtain more and more price information.
Can seasonals be used to pick market turning points?
Absolutely. They don't always work to spotlight the exact day of an expected turn, but at times the seasonal work we do is uncannily accurate at foretelling the exact days of market turning points - both peaks and bottoms - far ahead of time to the surprise of everyone except our readers.
Even people who use techniques such as Elliott wave analysis or cycle analysis therefore find our charts extremely useful for trading individual stocks and ETFs as well as the market indices. When that same date shows up on countless factor seasonal charts, it's like a little bell ringing that's telling us "be careful around this time." These days are reported in our newsletters and spell lots of money to traders when they're accurate. No one else produces this information, especially our lunar calendar seasonals that tell you when to expect that the regular seasonal trend won't be followed.
With our price seasonal charts and correlated charts we also often find sensitive days (and large trading range days) where the market jumps up or drops "unexpectedly" for traders who don't have these forewarnings. When we see the same turning points in many factor seasonal charts, once again we alert readers in our newsletters because those sensitive days tend to repeat themselves and result in some impressive market calls and profits for options traders. Why they are there we don't know, though some are definitely due to earning announcements. We just spotlight them in our newsletters and let you do the rest. Some of our subscribers like to put a trend change indicator on top of an reversal day expectation to create their own sensitive day trading system.
Do you use MACD and other indicators in predicting the markets?
Yes and no. Yes, we follow the MACD for our stock index forecasts of the DJIA, S&P500 and Nasdaq Composite Index, and also the Fisher Transform which we have found is faster when you are expecting a seasonal turn. We also follow John Ehlers' most advanced adaptive moving average crossovers to eliminate cycles from stock trends and create better moving average buy and sell signals than the 200-day, 100-day, 40-day or other moving averages.
Our newsletters focus on the many individual stocks and their reliable seasonals and confirmed trading tendencies. That's often much more valuable for traders than knowing there is an exact date to get into stocks around November and out around April. You can get that information for free just by plotting a MACD against the market indices.
Two services that we know of charge $30-40 per month primarily for that MACD signal which we know you can derive from free chart services on the web. We'd rather give you information that is not available except after reams and reams of analysis each month: lots of trading opportunities other than just two dates a year and a lot of commentary. One other bit of information those services may not know: you can filter many market MACD signals against our seasonals to arrive at even more accurate buy and sell signals, and you can use the lunar calendar seasonal to help know when you should be wary of relying on market history.
When the market is heading down, there are still plenty of stocks with seasonals that go up and we feel this is more valuable to traders than just the index direction alone. The information on stocks that are likely to decline is also valuable too as these are trading opportunities you want to know about in the direction of the trend. The individual stock information is especially valuable to investors and funds who have large positions and want to know how prices are likely to fare.
The beauty of our charts is that we've found that you can easily rule out many fake or false MACD trading signals for the market indices and individual stocks by simply looking at these price seasonals. Yes, the factor seasonal charts help you eliminate unprofitable indicator whipsaws. Many individual stocks have price patterns that are not correlated to the general market, so once again, we do at time provide the market index forecasts but focus on the price seasonals of individual stocks presently following their trustworthy seasonal patterns.
Are there times of the years or other conditions when the seasonal charts are more accurate than in other situations?
Seasonal predictions typically suffer a decline in accuracy during the summer months as well as in very choppy, volatile environments. The accuracy drops in the summer months, being rather volatile, because the prediction periods become much shorter in length. The accuracy of seasonal trend predictions rises for longer trends, steeper trends, and when the trends are confirmed via some trend confirmation signal such as a moving average or MACD trigger. The accuracy also drops when we encounter new economic conditions never seen before.
While we reveal the factor seasonal trends for shorter term trades in our newsletters, it's best to stick to trading the longer term trends where the green and orange lines both confirm one another and the anticipated trend has been confirmed by some type of trading signal. In other words, all things being equal, don't bet on a short term trend but on a long term trend. If you are expecting a change in trend sometime during a month, you'd trade it as you normally would when expecting any flex point projection arrived at through cycles, Elliott wave or other forms of technical analysis -- you wouldn't bet blind but would watch your indicators for trend change confirmation or have set trendlines and resistance lines whose violation would trigger a buy or sell signal.
If you continue to put into place the stops and whatever other protective measures you would normally use for non-seasonal trades when trading seasonals, then you're no worse off trading the seasonals. As we always say, factor seasonal projections often go wrong just like every other forecasting technique, especially with shorter term projections in volatile environments, so protect yourself by managing your risks as you normally would. Having the factor seasonals is no guarantee of investment success.
Will I make money using your Factor Seasonal charts?
Hold on. With that type of question you better go to another site or avoid trading and investing altogether. No one can guarantee you'll make money trading the markets or using any particular technique. In fact, you're almost guaranteed to be wrong a significant period of time, which is why we developed these charts. If anyone promises you profits using a particular system they'd be in jail so we'll be the first to tell you that there are times when our factor seasonal charts are wrong in a big way.
Stuff happens, unforeseen events happen -- CEOs step down, presidents announce legislative changes, factories are destroyed in hurricanes, competitors announce product breakthroughs, and so on it goes. The prices start veering away from the historical trends in those and other cases. But the great thing is, you can see immediately when prices are not following the charts and simply not use those charts. Go on to something else - there are always several dozen stocks to trade in each of our newsletters. You can also set indicators on your own Watch lists for price change expectations knowing they won't trigger if the chart is wrong and the trend continues. That's great for options traders.
There are all sorts of ways you can protect yourself and you always should manage risks when trading stocks, so with factor seasonals you have extra information to HELP YOU protect yourself that you don't have if you just buy a stock blind. Furthermore, as an old cycles expert once said, "When the stock starts veering away from its cycle projections in a dramatic fashion, that's giving you valuable information, too." The same goes for seasonal charts -- when a stock starts veering away from its normal seasonal trend which it has been following, that's telling you something new and important has happened that you must factor into your investment decisions. So they often provide the very earliest tip-off that you should dig into a stock and investigate what's happening ... a tip-off that happens far earlier than a new momentum high.
But the big point we want to make is that this method is not fool proof. At times Warren Buffet has bad months, bad years, and bad stocks and this method will not work for everything either, but when it does it's just killer. The question is, "Can you make money when you receive, each month, a visual set of stocks following their seasonals whose upcoming trends are supported by historical behavior under different fundamental conditions?"
Can you tell us the exact formulas you use for all your Factor Seasonal models that are used to derive your Factor Seasonal trend charts?
Thanks for asking. What's most important is knowing if the method works rather than our formulas and dates (which people want so they can copy our services). You can therefore check the accuracy of the method, which is what really matters, by signing up for a free trial subscription.
We can tell you that the political seasonals dates are derived from the first day that the new Congress, Senate or President takes office which varies from year to year. We're a stickler on getting these things timed to the exact day so we searched Congressional records back to the 1800's to get them.
The bull-bear market seasonal is derived from the definition of a bear market being a 15% decline rather than 20% decline because when it drops that much, investors are worried about their positions and want to see what the seasonal charts reveal. Therefore we don't define a bear market as a 20% drop because that's much too late for investors. Let someone else argue over whether a bear market is a 15%, 17% or 20% decline ... you're going to want to flip to the bear market seasonal anyway when the market starts tanking. As for the recession-expansion dates, they are the classical dates released to the public from NBER (National Bureau of Economic Research).
As to our economic seasonals, they are derived from dates output from proprietary models we developed of the influence of economic variables on the stock market, so we cannot reveal these models publicly. That includes the exact formulas for our inflation rate, T-note (interest rate) and Monetary conditions models. The Monetary model divides time into two periods: those bullish periods favorable for stocks to advance, and a negative interest rate environment period which usually produces bear market conditions.
Int emrs of these seasonals, the recession-expanison, bull-bear market, and monetary environment charts are the most important at present. However, if we head towards inflation again, the inflation seasonal charts will regain importance.
Why don't you provide buy and sell recommendations or targets and protective stops for the stocks you highlight each month?
We are financial publishers, not investment advisers registered with the SEC and not CFPs (certified financial planners). Because we're not registered as investment advisors we cannot tell individuals when to buy or sell stocks. However, we can give you charts where what to do is obvious to a five year old.
With the visual charts we provide and the MACD alerts of crossovers that occur for stocks, investors can easily apply their own trading and investment judgments as to whether they want to buy or sell securities or options.
For legal purposes again and again we must tell you that if you read our newsletters or watch our videos and you see us discussing one ETF or stock or options or a market index, do
not think that is a recommendation. We just show the charts that reveal the visual trends, and for educational purposes tell you when there's a MACD crossover like many notification services. Our publications are not intended to be, nor do they constitute, personalized or individual investment advice or recommendations to buy or sell a security and you should never consider them as such.
We're a financial publisher which just reports on the technical trends we have found. It's up to you to make a buy or sell decision. As a publisher we cater to all types of clients, each with their own individual trading style that might involve trading triggers, unique stops, option strategies, price targets and so forth.
The many different types of investors who use our services each have their own unique style that works for them, and the visual nature of our charts makes investment decisions a snap. With our MACD alerts and weekly updates of the market projections, we've chosen the route of simply supplying the best information that helps make your own trading strategies, systems and plans more successful.
Most of our energy every day is spent on the job of decomposing the effects of different fundamental environments on the markets and deciphering how that affects individual stocks. Then we must present it in such a simplified fashion so that individuals can quickly decide what to do for their trading and investment decisions. We want you to be able to arrive at your own decisions quickly and easily, and we want you to be able to reduce your risks and stack as many odds in your favor.
Every month more price information comes in that can alter the previous forecasts because different years can be more correlated to the new pattern that's emerging. The market is like a living organism so you have to adapt to any new developments that arise and compare those to past history. The very hard part is therefore computationally teasing the right information out of the stock prices to present as accurate trends to you as possible. That's what we concentrate on providing.
Here is my own analysis of the XXX stock. What is your opinion please?
Our apologies but we do not comment on individual stocks or investments. We produce charts for the stocks each month which are mathematically following their seasonal patterns and whose trends are supported by the factor seasonals. You can also purchase entire chart books of our full set of factor seasonals for certain stocks from our Products and Services page, or can private order a chart book for a stock we don't list so that you can arrive at your own conclusion. You can even order just a "orange projection line" that makes use of our selection technique. But as educational investment publishers we do not render specific buy or sell advice. Once you see the chart, you decide what to do yourself.
I have positions in stocks XXX and YYY. What should I do with them?
Because we are not investment advisors we cannot offer specific investment advice or recommendations to individuals, and at no time should you infer that specific advice is being given. Any information made available through Market Timing Research is not intended to be, nor does it constitute, personalized or individual investment advice or recommendations to buy or sell a security.
While a course of conduct regarding investments can be formulated from the application of the Factor Seasonals, at no time will Market Timing Research make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.
That being said, when you subscribe to our Super Trader's Newsletter Package, you get a copy of our software and in 3 seconds can have a seasonal chart which gives clear long or short trend projections on any stock that might interest you. Once you learn how to do this, you will want to be doing it with everything.
Why do various financial institutions say the market does not have seasonal patterns?
They don't refer to the published research, or they don't want investing to become that simple because if that's the case you won't need many of their expensive services. They continue collecting commissions the less you know.
Let's put aside various publications that have investigated and extensively proved the existence of seasonals, such as Yale Hirsch's Stock Trader's Almanac, Zweig's Winning on Wall Street, and the work of Steve Moore, Sy Harding, Larry Williams, Nelson Freeburg and others. Instead, let's turn to the academics.
In the last decade, dozens of seasonal studies have appeared in the financial academic journals such as the Journal of Finance and Journal of Portfolio Management.
Wharton finance professor Jeremy Siegal has noted, "Recent research has revealed that there are predictable times during which stocks as a whole, and certain classes of stocks in particular, excel in the market." (Stocks for the Long Run, 1994, pg. 266) This is exactly what we give you each month, and we tried to make it more timely than Stovall's work for the S&P sectors.
There are even studies that have found that the bullish November to April stock market cycle that we typically find in the US has been observed in 35 of 36 markets. That's right -- in 35 of 36 non-US markets that have different economic and monetary conditions than our own. That means the timing of mutual fund distributions, salary bonuses, tax refunds, profit sharing contributions and reinvestments have differed greatly in these 36 markets, and yet 35 of them showed this same annual seasonal. Scholars have even traced it in England as far back as 1694.
When people don't know why they tend to keep silent. We personally think for the US that it's due to money flow seasonalities and the annual economic cycle peculiar to each company. Consider the regularity of money pouring into the markets:
The TAX CYCLE – small business owners -- which represent 99.7% of ALL BUSINESSES – compute their profits for the previous year at the same times of year and then put a portion into the market
TAX REFUNDS flood into the market at the same time every year – which get invested in stocks …
YEAR END CORPORATE CONTRIBUTIONS when employers match their employee’s contributions to their retirement accounts, 401k & pension plans – accounts holding an estimated $5.7 TRILLION in assets – flood into the market at the same times every year…
WALL STREET’s FISCAL YEAR ends September 30th; capital gains and dividend distributions go out to investors on a regular annual schedule … PLUS, dividends are re-invested at the same times of year …
COMMODITIES MARKETS fluctuate as supply and demand seasonally changes, the effects rippling out through the markets because of increasing or decreasing costs of raw materials …
PLUS many INDUSTRY SECTORS see seasonally driven sales that get reflected in stock prices like the $4.48 TRILLION retail sector …. the $749 BILLION travel & hospitality sector … agriculture because of predictable growing seasons … defense contracting because of the government's fiscal budgeting cycle … the jewelry sector, retail sector, and more.
We simply compute all the computations to deconstruct the right seasonals out of past price histories, see if the prices are following those steady patterns, next determine if there is fundamental factor support for those trends to continue, and then make it available for your use.
For many stocks it is extremely valuable. In fact, the more money you have invested in a stock, the more valuable this information becomes when the stock is indeed following its typical annual seasonal price pattern.
Where can I get the charting software that you use?
We use a variety of proprietary software that we personally built for analyzing the markets. It is not publicly available or for sale. On the front page of the site is a video where you can peek into one of our behind-the-scenes control panels for just one of the programs we've built for this type of analysis. We also have special software of interest to active traders that reveals lists of potential large range days, potential turning days, cycle forecasts and volatility projections.
If you subscribe to our Super Traders Package, we do provide a boiled down version of our software that works on IBM PCs.
Can you tell me why XXX's seasonals look different than yours?
There are many different ways to compute a seasonal, each having its own benefits and drawbacks. The method we use comes from years of experience. You could be referring to anyone of the many alternatives we tried. Differences can arise due to the mathematical computations, the price histories used (whether adjusted for splits or not), the number of years used in the calculation, and other factors as well.
Have you thought of trying this variation to your Seasonal Timing System?
We're always trying new things to make our forecasts more valuable to traders, and always want to offer new services to make your trading more successful. We certainly have the computers for it. If there is a service you'd like us to produce, please send us an email at firstname.lastname@example.org.
I was just analyzing stock XXX, and think it's a great stock. You should consider recommending it for the following reasons ...
We do not recommend individual stocks or investments. We only compute and then report the results of the Factor Seasonal analysis we perform each month. We are a financial publisher and not investment advisors, nor do we pretend to be. We don't attach buy or sell signals to the charts or recommend individual strategies or shares.
We simply spotlight those shares that are (1) following their seasonal and (2) that trend is historically supported by the fundamental factor seasonal information. Our service is the first to combine the best of fundamental and technical analysis, which is why it attracts all types of traders and investors. No one else does this. Imagine finding a stock following its historical trading pattern with high accuracy, and that trend is supported by a historical test of fundamental forces in different economic and political environments. We report on those trends. And if you want to keep track of when a MACD triggers a crossover near turning points in those trends, we publish that, too.
Can you illustrate how to make a sample trade using Factor Seasonal charts?
Sure. Here's one to order on WYNN ... with our monthly Factor Seasonal newsletters combined with our daily signals, you can find many perfect set-ups like this each and every month. We like Jimmy Buffett style trading ... but remember you can use this for longer term investing too as it foretells the probable highs and lows of the year whenever you want to make a position trade. But always check with the factor seasonals first, not just our special price seasonals, to see if there is fundamental support for that stock.