How To Trade Stocks Right During Returning Cycles

This year, the recurring market trends were a bust. The majority plainly did not pan out.

On the other hand, that actually is not anything novel. If you do a 25 year chart on the main indices, you will establish that a few years basically don’t happen as expected. However what you will also observe is that in the majority of years, they mostly do.

What does that represent for us going into 2010?

It means that 2009 was one of those uncommon years where seasonality did not work meaning that in 2010, seasonality will most likely work once more.

The first cyclic trend will be upon us in just a couple of weeks, so let’s do a fast review.

The stock market has quite consistent and reliable seasonal trends. You must understand the most important cyclic trends, given that this information can stop you from being extremely bullish at a recurring peak or excessively bearish at a seasonal low.

In a nutshell, the common trends support a drop 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 shifting market in mid-April, possibly related to the April 15 tax deadline. The early summer months are regularly 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 robust market. The Christmas holidays are usually calm, with jerky and thin markets. There are always exceptions to these legitimate trends, but the general pattern is really reliable.

Print this article if you have to and stick it near your trading monitor. I think that because 2009 was a rare bust for the majority of the cyclic trends discussed above, 2010 will be an on year. One of the major errors amateur traders make is that they get sniped by more advanced fighters who know the seasonality trends.

To learn the rigorous technique of how a expert stock trader has made more than 100 million look at short term stock trading and for a lot of precious stock trading training, remarks, picks and a lot more, see how to trade stocks

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