Trade Example #5
In this Track 'n Trade Trading Training video, I want to talk to you about how you can use the Seasonal nature of markets and the historical price averages, when you're a day trader. So, I want to show you how you can use the historical seasonal, to help you with your day trading.
Now, technically speaking, we come back and look at the seasonals. What we generally find, in the S&P 500 is that we see a general rally time frame, between this time frame, here. Starting back in October, and rallying forward into February. This is generally a time that we see a strong up swing in the S&P 500. Now, that's on the 0-100 scale in the Seasonals Indicator for the Trend Indicator. So, that's the trend, generally an uptrend, during this time frame.
So, if we come back here, of course, we go to our Tools. We turn on our threshold, we see that- that break starts right around here. We start looking for an opportunity to be long, or go long the market; right in this time-frame, here. Which is about, what, October 28th? Now, as the market starts to rally forward, we generally see this type of an incline, all the way into...what is it, into February? So, into February we look through this. Now, notice this is on the Trend Indicator. If we look at the historical averages, notice that this is last year; or the previous years historical averages. Notice we have rally up through there. Then, we have kind of this little pull-back. It didn't quite go all the way, it didn't continue to rally all the way through. But that's kind of consistent with what we see on the long term averages, as well.
Let's look down here, a little bit more. This is the 3 year average, again, on the 3 year average, you can see a long uptrend. Of course, it started towards the end of this little time period. It started to drop off, again on the 3 year average, as well. So, something we can anticipate.
But how do we use this for day-trading? Lets watch, as the market moves forward, notice at about this time frame, right in here where this market starts crossing over, coming out of this, coming out of this low point, crossing into the uptrend. Notice, that the Bulls 'n Bears starts to rally and show us that this market is rallying, during this time frame, as well. So, we now have a Buy signal, a yellow, followed by a green, accompanied with a Bullish arrow. But, at this point, this is where if you're a day-trader, you want to start looking for markets to be long. So, if you're going to go into the day-trading mode, then you would want to look for the market to close, of course, higher than it opened. You would be Bullish the market, throughout this time-frame. As the market rallies up through this time-frame, you can notice that this would be a good time, even if you're day-trading to notice that you're going to get some nice rally points, up through here. This is where you would use this type of information, to help you make your trading decisions, based on the rally points of these different markets. Seasonally speaking, whether you're going to be long or short the market.
Notice, again, this is where this starts to fall off. Not only last year, but seasonally speaking. On a longer term, we see this kind of, this fall off, this funny little fall off, down in this sideways, neutral market, during this time frame. So, you would want to take that into consideration, during your day trading. As you're watching your day trading moves go along, you want to take this longer term trend. See, a Daily Chart, is a long term chart for a day-trader. So, this type of information can be very valuable to a day-trader.