The number of well known institutions and investors in the financial field who have extensively researched, confirmed and then written about the power of seasonal trends ... or even used them to help build their fortunes ... continues to grow and grow. Ned Davis Research, Stock Traders Almanac, The Institute for Econometric Research Inc, Frank Taucher, Sy Harding, Asset Management Research Corp, Larry Williams, Nelson Freeburg and others have researched stock seasonal trends and popularized the fact that they do play a major role in investment returns.
The famous Stock Trader's Almanac, for instance, has found that if you combine seasonal trend expectations of the Dow Jones or S&P500 index with a MACD system that tells you when to get in and out of the market just once per year, you can far outperform the stock market many times over. They are using a very simple price seasonal combined with the MACD, or other indicators, such as the following:
As you can see, we don't just use the MACD but several other proprietary indicators to time the markets such as the Fisher Transform for quick turning point signals, and John Ehlers cycle swing indicators and Instantaneous Trendlines which get rid of the need to guess the proper length of a moving average to use for market timing purposes. You can find out more about his special indicators at Eminiz.com. In any case, the first part of our Dow Jones timing newsletter reports on the forecast of that market index for the coming month. We even use cycles to help confirm our work when needed.
We've found that seasonals can be extremely useful -- meaning extremely profitable -- for timing individual stock trading and investing as well. With stock seasonal charts we're able to select "3 month Hot Stocks" that have upwards trends just by looking at rising patterns that the stocks are already following with high momentum. Though we report on the market index seasonals for the Dow, S&P and Nasdaq indices, we're devoted to stock seasonal trends information for individual stocks because that's where most investors have their dollars and where you have the biggest and best chance to outperform the market.
It's true that the seasonal chart for a stock remains relatively the same when a new year rolls in, but the static chart is not how we use seasonal trends for timing. That's far too simplistic even though it does work more often than not.
We produce many types of seasonal charts for a stock that has lived through many different market environments, and we're always monitoring to see which of these charts that a stock (or market index) is following on a real time basis. If you want better stock forecasts, predictions or expectations then this is the best type of analysis you will ever find. There's no better way to derive accurate buy and sell signals than by looking at these charts and putting a triggering mechanism in at expected turning point periods.
So the first thing we do differently from others is produce a wide variety of seasonal charts for every investment we examine -- how a stock or index or ETF or whatever performs in Bull/Bear markets, Recessions/Expansions, under different political environments, and under different economic environments such as Rising/Falling Inflation, Bullish/Bearish Monetary Conditions, Rising/Falling Interest rates, and so forth. No one else performs this type of analysis (some of which is available to you on our Products page) which reveals the well hidden information on how fundamental factors or different "factor" environments behaviorally affect share prices.
We're the only ones who actually deconstruct the price behavior of shares out of various fundamental environments ... and political environments and purely price (technical) environments, too. So unlike services that are only for fundamental investors or technical analysis, our analysis technique actually combines both. And it's extremely accurate at picking market winners, especially for short term quarterly forecasts.
With today's volatile markets and precarious economic condition, no one can be wed to the long term view of the market anymore, and our market directional forecasts enable you to become free of the normal confines of having to put all your chips on one stock and wait and wait and wait for results. It's either immediately right or wrong, which enables you to cut your risks (and losses when they occur) tremendously.
Both types of users -- both the long term and active short term investor -- benefit from our services. We've managed to meld together fundamental and technical analysis in a way where you can resolve your doubts and make quicker investment decisions because you visually SEE what's going to happen right before you, it's repeating historically derived behavior (and there's a logical fundamental reason for the repetition), and because the market is right now following that proven pattern. If it isn't, you skip that stock and go on to another one! Investing becomes that simple.
Out of the thousands and thousands of stocks you could possible trade, we find and pull out the ones that are following their historical pattern and have fundamental support for that seasonal price pattern. You don't need cycles or Elliott waves or long term forecasts -- just see who is following the projected trend that has fundamental factor support. If it isn't following the trend, it's not predictable with our method so skip it and enjoy mental peace.
We cannot guarantee these stocks will continue to follow their patterns into the future, but you're looking for odds in your favor and an edge for investment purposes. The potential profits for some stock movements that follow through on the historic pattern is simply enormous - a many percentage return on a portfolio - and if you protect yourself in case they don't then you're doing what you would normally do when initially purchasing any type of investment.
A fundamentalist might say that stock ABC usually goes up 17% in high inflationary environments, but we actually produce the seasonal chart for how stock ABC performs in high inflation or decreasing inflation environments and under other fundamental economic conditions. You can visually see how it reacts in different market environments and if this doesn't affect your trading decisions, I don't know what can.
We call these various fundamental conditions "factors" for short. Because we show the typical price behavior of the stock's annual cycle under different factors or environments, that's why our services are so useful to the hedge funds, mutual funds and highly secretive proprietary traders who would pooh-pooh seasonals if you ever interviewed them on television. Now you can spy on the exact type of research they try to do in-house before they bet their millions to move the markets in those directions.
A stock is usually following the pattern of one of these many "factor" seasonals that we compute, and when we identify that pattern it becomes the one we focus on. Naturally the other factor seasonals lend support to our analysis as well, especially the price seasonal and seasonals constructed out of years that "most look like this one."
This is extremely important to the accuracy of our technique: while the overall price seasonal retains the same basic shape from year to year, we also produce seasonal charts out of the past years whose patterns seem most similar in shape (are most correlated) to the current year in question. These "Most Correlated Years" seasonals also help us to see whether our forecasts are on track confirming our analysis or not.
An example for Dupont (DD) is seen below where the yellow line is the current market price at the time this chart was produced.
The orange line is the projection of prices arrived at by taking the most correlated past years to the present price behavior and producing a seasonal projection out of those historic behaviors. If we produced a "Most Correlated Years" seasonals a few months later, an entirely different orange projection line would come up as well:
What we really are searching for to report in our newsletters are big upcoming moves (either way up or down) or long sustained moves suggested by a variety of different factor seasonals for the same stock ... and we want to see current stock prices correlated to those seasonals, which means that we want to see prices following the expected patterns.
Our factor seasonal charts, predictions, projections, analyses or forecasts - whatever you wish to call them - are never a sure thing but we try to find as much confirmation as possible in order to reduce as much risk as possible to make your investing or trading as safe as possible ... a noble task now that interest pays practically nothing on bank accounts. Al I can tell you is that we HATE risk, so we look for confirmation again and again and again.
If you make just a few extra percentage points per year because of this information, we have done what we set out to do. But frankly, traders tell us they are making far more than an extra few percent with our information. It's like having a secret key to riches, especially to those with a large trading position or to options players and others who love volatility and need predictions for turning points. Just one perfect trade can pay for our services for many years into the future.
Even if you are a fundamental value investor, knowing the timing tendency for lowest prices of the year and then timing a optional purchase according to the seasonals can help you get better value for your investment and a much higher return. If you're going to invest thousands of dollars then this information is priceless.
The fact that we compute so many individual factor seasonals for stocks is because nothing remains static, fixed or exactly repeated from year-to-year. We're always looking to see which factor seasonal pattern a stock may be following right now and if it isn't following any at all, we just report to you those that do. We're only looking to report on shares that are following their expected pattern, and we want that pattern to be as strongly supported as possible by the fundamental factor seasonals, too.
Of all those seasonals, we take steps each month to highlight the ones with the largest potential change in trend, which translates into large percentage gains for the portfolio. You don't just want to know that a stock is following its seasonal, but that a LARGE move is expected.
An example of one of these highly successful forecasts (and there are usually several possible each month which we find though extensive analysis) is shown below. Even though the yellow line of current prices shows we got in late, the price of OXY (a depressed oil stock at the time which showed up on the screens of value investors) continued to go right up until mid June just as expected despite a deep recession suppressing oil prices.
In fact, no fundamental nor technical analyst could predict this price behavior (especially to the near exact day) except by using our special factor seasonals:
Knowing that a stock isn't following the expected seasonal is valuable information too because that's when it's telegraphing a message to the world, "Hey, look here! Something new and unusual is going on and it may be worth a lot of money to you!" Seasonals are one of the few mechanisms that allow you to spot aberrant behavior like this which can also be the key to a fortune.
When we find stocks that are closely following their expected seasonal patterns and large moves are coming soon, that's what we like reporting most each month because we know you know how to make money with those.
And when we find that this expected pattern is supported by the many other various seasonal charts (which take entirely different subsets of historical years into account), those are the shares that we specifically single out in our newsletter. We want a BIG price change, that lasts for several weeks, that's confirmed by other factor seasonals, and we want to see the market correlated to this expected outcome. That's what our newsletters are about.
Perhaps you'll use that information to add to your positions or scale out of them. Maybe you'll use the information to raise stops or price targets or protect against a correction in a different way. Perhaps you'll use it for options trading such as determining the periods when you feel safest to write options to collect premium.
We don't advise you what to do -- it's up to you because you have your own trading style and know what works best for you. We never impart individualized advice. We do not 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. We provide you with the seasonal projections and know you'll use them according to your personal investment style.
Some people are long term value players or fundamentalists. Some are technical traders. Some people are investing with options and others are not. They all have a different style, so we make our charts as simple as possible so that you can immediately see what to do with YOUR personal style. We don't gear our newsletters to one type of individual but simply supply the valuable seasonal information and forecasts that are of value to nearly all. We find the stocks following their trends, and you do the rest.
Previously you didn't have this information available anywhere. Now you can know what to expect for the index stocks on a month-to-month basis. Not with 100% certainty because that's impossible, but with probability or likelihood because of the market correlation to the various seasonal patterns. Error and uncertainty are always part of any effort to assess future probabilities but this is the best means we ever found to come up with those future projections when the patterns confirm one another.
All the seasonals we produce are calendar based. This means that to produce a seasonal chart we take the same calendar day (ex. May 17 or 05/17) and search for all the previous same calendar days in our price database. Every year we find the highest and lowest prices for the year, and normalize all other prices according to that scale to form a "yearly seasonal." We create a seasonal chart of all prior historical years, or just subsets of years when the correlation is better that way, by averaging together the yearly seasonals for those same calendar days.
There are other ways to produce seasonals, too. In fact, we are the only service that produces a lunar calendar seasonal, and seasonals where the time scale is based on the trading day of the month or the day of the week in the month. And of course, our factor seasonals subset past investment years into different economic and political subsets to see the price behavior in different fundamental environments.
You can find information on these on the various price seasonals in our special report for options timing and you can purchase a variety of factor seasonal books for various stock groups from our products page.
The most important starting point is to get on our email list, read our free reports on how we do our analysis and then try a subscription. The easiest way to get started making money with seasonals is to have the information in hand and see how to use it yourself.