Seasonal Cycles

The long-term cycles always top and bottom with a Seasonal Cycle and the Seasonal Cycle sets the trend for a large part of the year.

For example, in a bull move out of a Seasonal low, a rise of 7 months or more is not uncommon. The trend, then, would be up for seven months. Conversely, in a bear move, the Seasonal can move down for 7 months or more from the Seasonal high, so identification of the Seasonal high would set an expectation for a prolonged bear market. Seasonal Cycles are easy to accept in the agricultural markets because we know the cause. Generally, it is harvest which sets the lows, and prices move higher throughout the year until the next harvest with variations based on increases or decreases in demand, supply and expectations. But there are also Seasonal tendencies that show up in the metals, the stock market, interest rate markets, and currencies that are not as consistent as the agricultural markets.

Seasonal tendencies mean that a market will tend to top and bottom at certain times of the year, or in some cases have a fast market at certain times of the year.

Practical approach is to isolate the time periods in which Seasonal highs and lows have occurred 70% or more of the time, and call this the basic Seasonal Cycle. The time periods for the highs and lows of markets with distinct Seasonal Cycles are on the following page. Below them are listed the markets with Seasonal tendencies.

SEASONAL TENDENCIES

S&P Index - Lows tend to be made September through November, or February/March. Highs tend to be made August through October or April. Interest Rates - Lows tend to occur in the first or third quarter; highs tend to occur in the third or fourth quarter

Precious Metals In bull markets, the tendency is to top in the first quarter, and bottom in second quarter. In bear markets, the tendency is to bottom in third quarter and top in third or fourth quarter.

Currencies - Lows tend to occur May-September; highs tend to occur November-April.