Mother Nature – One More Reason the Pullback is Not Over

Seasonality is one of those things that is talked about in Technical Analysis books in the same chapter as the Election Cycle, Demographic Cycles, the 50 year Kondratieff Wave, planetary movements and all other longer term indicators. Generally a page or two each at most. Not very useful for a trader unless your timeframe is measured in years or the very shortest months. Seasonality also brings to mind commodities traders as they trade in perishable items that are directly and visibly impacted by the calendar. But seasonality can be helpful to the short term equity trader occasionally too. Now is one of those times. The weekly chart of the S&P 500, $SPX, below has been stripped down to easily show the seasonality in the Index that has been visible since the the Financial meltdown. And the story does not look like a happy ending for it this summer. Notice that each of the last 3 years the peak has occurred roughly in April and the movement back higher from a low point basing begins in August or September. Will it happen again. Maybe, maybe not, but it is worth acknowledging the recent seasonality and then noting that it fits with the recent trend in the broad market.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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