Bizarre Short Term Stock Trading And Repeating Patterns
This year, the seasonal market trends were a kaput. The majority simply did not pan out.
However, that really is not anything novel. If you do a 25 year graphic representation on the major indices, you will notice that some years just don't happen as expected. But what you will also establish is that in the majority of years, they usually do.
What does this suggest 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 probably work again.
The initial recurring trend will be upon us in just a couple of weeks, so let's do a quick review.
The stock market has fairly consistent and dependable seasonal trends. You ought to be familiar with the most prominent recurring trends, given that this knowledge can stop you from being too bullish at a seasonal peak or overly bearish at a seasonal low.
In a nutshell, the general trends support a decline 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 choppy market in mid-April, conceivably 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 usually 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 vigorous market. The Christmas holidays are usually calm, with changing and thin markets. There are always exceptions to these genuine trends, but the general pattern is really dependable.
Print this article if you have to and stick it near your trading screen. I believe that because 2009 was a uncommon bust for a good number of the cyclic trends discussed above, 2010 will be an on year. One of the main errors amateur traders make is that they get sniped by more superior fighters who know the seasonality trends.
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Tags:business,Day Trading,economy,Finance,stock market,Stock Trading
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