Incredible Short Term Stock Trading During Unique Times Of The Year
December 18, 2009 by Lupie Gonzales
Filed under Stock Trading
This time, the seasonal market trends were a bust. Nearly everyone plainly did not pan out.
Then again, that actually is not anything novel. If you do a 25 year chart on the major indices, you will establish that a few years basically don’t work. However what you will also understand is that in the majority of years, they typically do.
What does that suggest for us going into 2010?
It means that 2009 was one of those odd years where seasonality did not work meaning that in 2010, seasonality will most likely work once more.
The first seasonal 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 dependable cyclic trends. You must understand the most well-known recurring trends, given that this knowledge can stop you from being too bullish at a recurring peak or too bearish at a seasonal low.
In a nutshell, the general trends support a drop in early January (perhaps profit-taking selling), followed by a mid-January rally. By late March or early April the market often reaches a peak, followed by a jerky market in mid-April, perhaps related to the April 15 tax deadline. The early summer months are often characterized by a midsummer rally, culminating in a market top in late July or early August. September and October are typically down months in the stock market (witness the 1929 Crash and the 1987 October decline), with the lows taking place 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 amazingly reliable.
Print this article if you have to and stick it near your trading screen. I think that because 2009 was a rare bust for nearly all of the recurring trends discussed above, 2010 will be an on year. One of the principal errors amateur traders make is that they get sniped by more advanced fighters who know the seasonality trends.
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