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Seasonals Plug-in
Evaluating Trends
Video Transcript
In this Track 'n Trade Trading Training video, I want to just take you through some different charts within Track 'n Trade and just look at them from a seasonal standpoint.
Now, the first thing we're looking at here is the Feeder Cattle. You can notice that in Feeder Cattle we have, (seasonally speaking through Feeder Cattle) we have kind of a low right in April, between May and April. Then, in April, it's starts to generally have an incline, again. You can see that this is the Feeder Cattle contract, and it just kind of followed along with that same type of trend. We have kind of this little trend going on here, we kind of experience that same type of thing here. So, you can see that Feeder Cattle has been following the trend or the Seasonal Trend quite strongly.
So, if we go to the next contract, let's go over here to Cocoa. You'll notice that Cocoa, again also has this kind of an overall trend, a drop, and then a climb into expiration. Of course, you can see that this market followed that trend, pretty much like a train on rails. So, you see that- that's more recent. You'll notice that's the 10 year contract, the blue, so this blue background, being the 10 year. The 15 year is the red line that you see in here. You'll notice that if we go back further in history, this time frame has actually been a little bit more sideways through here. You'll even notice on the 10 year, that it generally has a tendency to go sideways through this time period, even though over the long trend it is up, we do have some generally sideways types of trends that happen during this time frame, in that time. So, we need to keep mindful of that, that- that's what we might be finding during those time frames.
So, let's go onto the next one, this is Coffee. Coffee is a pretty seasonal commodity. You can see that it generally has a nice uptrend, starting right in October, then this one of course followed suit. Then, we see a gentle fall off in price, which again, of course, followed suit. So, this is a general over all trend, that we see in Coffee during this time of year.
Now, of course the advantages of using the Bulls 'n Bears trading system that we have displayed on the screen, which changed the price bars from red, yellow, and green. Green of course is our Bullish trend, red is our Bearish trend, and of course we have our indication that the market is changing momentum. So, this is what we look for in this time frame. We want to see a momentum change, right in this time frame, when we are anticipating a rise in price through the seasonal trend. Of course, that's what we look for in our Indicators, to help us identify an entry point at the beginning of one of these seasonal trends.
Now, the great thing about Track 'n Trade is that the Seasonal Trend Tool is actually forward looking. If we scale the chart back in time, you'll notice that the seasonals, because it is a historical view of the market, doesn't go away. I mean, we still have that sitting out there as a guideline indicating to us that we have this potential, or of an uptrend during this time frame, so when we get our Buy Sell or indication that the market is changing into a rally point, this is what we're looking for. We're looking for this type of opportunity.
Of course, a lot of people will always ask me, they say, "Well, how do I know when to you know, load up on more trades, or more contract?" .....Of course, this would be a time that you would want to load up on more contracts. When the odds are more highly in your favor, that you have a nice trend in your favor, and you've got a signal indicating that market is changing into your favor, in with the seasonals, that's the time that you would want to load up on more contracts; rather than a counter seasonal trend.
So, let's go onto the next one, here's Copper. Here's another nice example, Copper is quite seasonal, as well. We generally see, starting at the first of the year this rally point coming into here, into expiration, in this contract. You can see once again, we have an opportunity where the market is changing over from a Bearish to Bullish. So, we have a Bullish indication with our Bulls 'n Bears Indicator indicating that this market is ready for the rally. Of course, this is where we anticipate this rise in price, and this is what we're looking for in our market.
Being able to watch that happen prior to, you know it's actually happening and taking place, you can see that this market is going to rally or is giving us the potential to rally into this uptrend. So, those are the opportunities that we're looking for, in using the Seasonal nature of the market and the historical averages, to give us an idea of what we can anticipate over this next time frame.
So, let's go in and look at the next one, this one is Cotton. Cotton, once again, you can see that we have a nice little uptrend and then, of course a big drop off happens around March. This is very common, it happens quite often enough that it's created this type of a trend within our seasonal market. Of course, you can see that we have this rally point here, that's coming in right at the right point. We have these, this point here where we got a little bit neutral or negative on the market. Then, of course with this we go into another rally point. This is where we have caught this nice big trend, here. Then of course, we anticipate this big blow off and that's exactly what happened with this market into expiration. So, again, here's another market caught in riding that seasonal trend that just a train, just like a train on rails.
So, let's go in- and not only does seasonals work with traditional commodities, such as Cotton and Copper, and Coffee, and you know, products that are planted at the same time every year, and that are harvested at the same time every year. But also, look at this: this is the Dow Jones. The Dow Jones also has a seasonal nature to it. You can see, here, that the Dow generally kind of dips through this time frame. Starting in January and doesn't rally again until about April. Around April we have that rally point, or maybe even back a little bit further.. mid March, we start to get the rally point in the Dow. It's happened often enough that it's caused this trend to occur over, clear back in, you know the 15 year mark and the 10 year mark. Here, we see it once again with the rally, through this time frame starting around March. So, we start looking for opportunities to go long the market in the Dow around March. That's where we get this type of a, this type of a rally.
If we go back, and we look just a little bit further out. Now, obviously this market isn't very active right now. But you can see that the trend, a little bit more strongly in the seasonals trend, here. Starting more strongly with March, all the way into mid-May. So, this is always a good time for looking for buying opportunities in the Dow.
So, let's go to the Euro Dollar. Euro Dollar, again a currency not a traditional commodity, but something that has a very seasonal nature to it. Currencies are used at specific times of years. More often than others, so you can see that we have this rally point, and this trading activity that kind of follows this seasonal trend- the 10 and the 15 year average. Generally here in December, we start to see a rally and then of course, it drops off out into May. Then, it goes sideways a little bit, for awhile. Of course, with the Track 'n Trade we can move forward in time. We can see an anticipation of what that market is going to do. So, what we can come over here and do- now this market generally goes sideways. You can see, starting in May into about July is probably generally a bit stagnant for this market. Then, it starts to rally quite strongly into September. So, we're looking for a rally point, right in here. So, with our Bulls 'n Bears Tool, which is my favorite Indicator; I will start watching for a changeover from neutral or from Bearish to Bullish around this time frame. Then, we'll start looking for buying opportunities to go long the market in Euro Dollars, sometime around July.
Natural Gas, again another one that's very Seasonal, of course and we can understand why Natural Gas would be very seasonal. A lot of people heat their homes with it. You can see that the price of Natural Gas generally rallies, starting in the cold season, January into April. This is another opportunity for us, you can see the Bulls 'n Bears coming in here with an indication that the market is changing over from neutral from this sideways market, this type of a trend into this nice rally point.
Now, a lot of people will continue to try and trade markets all year long. Time frames that generally are not very good time frames to be trading. For example: it's not a wise choice to be trying to find rally points through this time frame in Natural Gas. Simply because during this time frame it's generally going sideways. There's really not much of a trend. So, this is where you're going to get chewed up and spit out. You're going to lose a lot of your money, if you're trying to trade through this time period. That's why the Bulls 'n Bears and the combination of the Seasonals is so powerful.
We look for and we try to find and we identify different contract months that have this type of a trend on them. When we see this type of a trend, a nice big move like this, this is where we start looking for opportunities to go into the market. We use the seasonals to stay out of the market, during time frames, during quiet markets, through July August, September, October, and November with Natural Gas.
Now, here's RBOB or the Gasoline. This is Unleaded gasoline, again, very seasonal. It has a very seasonal nature to it. There's the driving season, when everybody wants to go on vacation and drive their cars. Of course, we have a nice big rally that generally starts in January into March, April, May. This is a very common rally point for gasoline. So, we start looking for opportunities to go long the market, this time of year. Now, notice that when we get a Sell Signal during this time of year, we're going to be very cautious. But you'll notice that when we start looking for an opportunity to go long this market, right around February, and here the Bulls 'n Bears is giving us a target point- an indication that this market is beginning to rally. Then, we watch for opportunities clear into May. Now, you'll notice that this contract continued to rise up into the past May. But we are now looking for a small pull back at this point. So, traditionally speaking we do see a small drop off in price, starting in May on this contract.
So, let's go out now let's look to Gold. Gold is a very traditional commodity. It has lots of seasonal characteristics to it. One of the main characteristics, or the most seasonal patterns known within the markets, is this Gold rally, right here. It generally starts right around August to September time frame. This is when we start looking for Gold to begin to rally. Of course, the majority of Gold is used for jewelry, and this is the wholesale market, of course. So, this is when all of our wholesalers start buying Gold for the Christmas season. Looking towards this time frame, here. So, what happens is that the Gold buyers start buying their Gold up, preparing for their jewelry season for Christmas, when you give gifts of gold.
Now, we go into Crude Oil, Crude Oil is another very seasonal market. It has been for over a number of years. It has a tendency to rally, even through all the strange price action that's been going on lately. It still has the tendency to rally along with the seasonal nature of the market. So, this big rally is nothing, not a real big surprise that we had a rally. The size of the rally is the surprise, not the fact that we had a rally. Because you'll notice that seasonally speaking, we generally always see a rally of price in Crude Oils, starting around January. Very common, it's happened over the last 10-15 years. We can chart it right here, and we can show you. At this point, we start looking for Bulls 'n Bears to give us an indication that it's time to get into the market to take advantage of this rally. Of course, we have the buy Signal, right here. An indication that the market is changing from neutral or Bearish to Bullish. That corresponds directly in exactly with what we're looking for in the Crude Oil. This is what gives us the opportunity to take advantage of this market.
Next one is Orange Juice, Orange Juice is another one that has some very seasonal nature to it. What we want to do, is we want to take a look at Orange Juice, here. Very quickly, you'll notice this rally point corresponds with this rally point. Of course, in December is where we generally look for a blow off or a price decrease in Orange Juice. Of course, this market dropped significantly during that time frame. From December all the way into April, where we start to see it level off a little bit. Of course, it did that exactly just like a train on rails, right into expiration.
So, let's go into the S&P 500. Now, the S&P 500, another market that you might not think is very seasonal in nature. But nonetheless has seasonal time frames that you can look at to see rally points. Of course, here's the same situation- it seems that in October the S&P 500 has a tendency to begin to rise into March. So, this is a rally point. So, we start looking for opportunities, again to go long and to get into the market, sometime in the October, November time frame; then look for opportunities to go long the market.
The S&P 500, through this time period. Of course, the S&P 500 as well, has some stagnant times. Times where you don't really want to be looking at the market, and trying to get into it. So, as you can see, the Seasonals can help us see and understand when those time frames are, and when it's going to be a little more difficult to pull out some longer term income out of the S&P 500. So, using the seasonal nature of the markets can significantly increase your odds of being right on the right side of the market. Of course, that's where we want to start loading up on our contracts and trading a larger number of contracts.
So, we come into the U.S. Dollar. U.S. Dollar, again very seasonal, seasonal in nature. You can see that starting around July, we generally see a drop off in the value of the dollar. Very common, it's happened over the last 10-15 years. Every year we try and kind of see this little drop off. Here it is, again, we can start looking for an opportunity to go short the dollar around July or mid June. Here we are with the Bulls 'n Bears, coming in and giving us that indication that the market is starting to fall off. Notice, this little bump in here. Seems very indicative over about the last 10 years, that- that market has done that often enough, that it's given us this little peak. Again, this year, it's giving us that little peak, which is pretty amazing. Then, of course, it drops like a rock, we take advantage of that. Again, using our Bulls 'n Bears to indicate that the market has changed momentum.
Let's go into the U.S. T-Note. Now, this is my favorite market for seasonal indication of all the markets, period. This is hands down is the most seasonal market, I have ever seen. It is the December contract, and it is unbelievable how seasonal and how predictable this market is. As you can see, this market begins to rally, right around the June, and July time frame. We watch it rally, all the way into expiration, clear into December. Bulls 'n Bear's, once again, is coming in with our indication. We're looking for a buying opportunity, here it is, and away we go. Of course, we have a little bit of stagnation coming in, after we make our little pull back, which is very traditional. Then, the market continues to rise, once again. Over the last 10 years, once it gets into October the continuation of the rise into December is not nearly as strong as it is from January to October. This is generally the stronger rally point, but we generally continue with a rally, further out as well.
Of course the Bulls 'n Bears helps us with that identifying that point, as well. But we also understand that markets move in waves, and that they don't go straight up. Although, this is the closest thing to straight up market I've ever seen. But we have this small pull back, and then the market begins to rally, once again, as we project out into the future in the actual expiration point.
So, there's Track 'n Trade going through and just quickly taking a look, or a glance through some of my favorite markets, and how they reflect through the seasonals using a combination of tools. The Bulls 'n Bears to give us indications of market momentum and at what time of year we should be paying attention to that type of a move.