Do you believe in seasonality? (Trader's Almanac)

[BlueHorseshoe]

Quote from cashonly:

Frikkin' awesome!!! What an eye opener... I like the comment about the dip in the S&P 500 starting mid-March to pay taxes!

Too bad they don't have it for specific stocks.

Cash

Seasonality less likely to be consistent for specific stocks given all the different stock-specific events that can occur. Also, a major move in 1 or 2 years is also more likely to skew any historical look.

Hirsch at Trader's Almanac does seasonal analysis on sectors, I believe. One might then use stocks within a particular sector if one so chooses, but that would be less reliable, I would think. For example, one might position in the OIH companies based on S/R and seasonality of oil.

 

[luisHK]

Any other recommendations on seasonality books and websites ?

I could add the more recent Jay Kaeppel Seasonal Stock Market Trends, although his system hasn't been all that succesful since he wrote that book in 2007

Any other recommendations on books and websites (I prefer books ) about seasonality ? also are some of you member of the tradersalmanach website ? is it worth it on top of their yearly almanach ?

 

[nutmeg]

Martin Zweig's Winning on Wall Street

A little old but he writes about seasonailty.

 

[oldtime]

what ever happened to Jake Bernstein? He wrote a whole book on seasonality. Everybody use to trade seasonally in commodities, and they tried to apply it to stocks. But once a pattern is recognized, it gets tweaked a little, So the Jan move up beomes the Dec move up and the Aug move down becomes the Jul move down, etc.

 

[luisHK]

Thanks Nutmeg, reading about the reputation of Martin Zweig, I would like discovering his opinion on the topic.

Oldtime, below is Jake Bernstein website, it seems he's still pretty much into seasonality

http://www.trade-futures.com/

As of the seasonal trends getting front run, it does happen indeed , but it also appears to be some very usable seasonal technicals.

I might join the almanachtrader website to read more on their sectors study, and for 30/40 usd, their yearly almanach carries some good information as well

 

[heywally]

The problem with seasonality is that it is an average and does not consider the more important current variables of market context, 'news flow', interest rates, corporate profitability and earnings guidance.

Sometimes "sell in May" works, sometimes it doesn't, even if it does slightly more often than not. Etc.

What works better is tracking how price behaves around significant support and resistance areas, year round.

 

[nutmeg]

Quote from heywally:

The problem with seasonality is that it is an average and does not consider the more important current variables of market context, 'news flow', interest rates, corporate profitability and earnings guidance.

.

Au contraire, I find it interesting any predictable averages at all in spite of all important current variables.Same goes for other historical data.

"This time it's different" because of the important market variables.

Not saying it might not be but shouldn't be ignored.

Which led me to the psychology of the market. How can patterns repeat when people places and things are different?

We can prove this out this year with the SnP, check out your almanca for presidential cycles and historical predictors of the Snp coming off a flat year.

 

[steve3001]

For specific stocks, can toggle between 2, 3, and 5 yr timeframe.

http://seasonalitycharts.appspot.com/?ticker=POT&view=charts&range=5y

I look at it quite often. I don't think it is something that should be ignored.

 

[noahc74]

i do believe in seasonality! you can see the statistics years back! back than again... doesnt mean it must happen... just the odds are higher!