The Four Key Seasonal Trends for 2012

Focus: STRATEGIES

Craft an effective approach for the year ahead armed with knowledge about these proven seasonal patterns, which commonly affect equities, commodities, and currency markets.

Over the past few years, there has been more discussion of the seasonal patterns in the financial markets. In the 1980s and 1990s, the seasonal research was concentrated on the commodity markets, as many veteran commodity traders were familiar with seasonal tendencies in the grains, meats, and soft commodities.

My first exposure to seasonal analysis was in the early 1990s through Steve Moore of the Moore Research Center, which provides extensive research into seasonal trends and how they can be used to trade commodity spreads.

Several years ago, I became more intrigued with seasonal analysis after several interviews with John Person, who has done extensive seasonal work on commodities as well as individual stocks and sectors.

During his interviews, John would often make seasonal references in his market analysis, and it was a November 2009 interview that really got my attention. In that interview, he told me that gold, which was currently rallying sharply, typically forms a short-term top at beginning of December. A couple weeks later, on December 3, 2009, gold made a high of $1227.50 and dropped below $1075 over the next 13 days.

More: View that 2009 interview here

I subsequently reviewed the Commodity Traders Almanac, which is co-edited by John.