As many “seasoned” market traders know, changes in the seasonal solar calendar can be points in time to look for changes in trend (or accelerations in trend) for many markets, indexes, commodities, and individual stocks. These are the static first days of spring, summer, fall, and winter which are referred to as the vernal and autumnal equinoxes, and the winter and summer solstices. They are approximately 90 degrees/days apart on the 360 degrees/365 days calendar. As it pertains to tradeable instruments, these measurements in time can be broken down even further into eighths of a year or mid-season dates of 45 degrees/days and sixteenths of a year of 22.5 degrees/days. These degree/day counts are not only important on the yearly solar calendar but can be used as reference points for major tradeable turns from significant highs and lows in the instrument at hand.
As all will remember the big pandemic panic low of 2020 came in for many stocks and indexes within one trading day of the spring equinox of March 20th of that year. So if one is somewhat skeptical of this tendency in markets, that one event should be enough to warrant investigation. Let’s examine some stocks in the DJIA to see if we have had any major trend changes/swings over the last year that appear on the changes in season within a few days on either side. Over this past year the seasonal dates would be for Fall 2020 September 22nd, Winter 2020 Dec. 21, Spring 2021 Mar. 21st, and Summer 2021 June 21st.
American Express (AXP) had tradeable swing lows on these dates: Sept. 24, 2020, Dec. 21, 2020, Mar. 23 2021 and June 18, 2021.
Caterpillar (CAT) had tradeable swings on Sept. 24, 2020 (low), Mar. 18, 2021 (high), and June 18, 2021 (Low).
Chevron (CVX) had tradeable swing lows on these dates: Dec 21, 2020, March 23, 2021, June 18, 2021.
Goldman Sachs (GS) had two tradeable lows on the dates of Sept 23, 2020, and June 18, 2021.
We will stop here as the point is made and one can see the value of such an approach.
In addition, this method of using static seasonal change dates can be applied to points in time from other important lows and highs as well. A season is a period of approximately 90 days/degrees in time. So as traders we can mark times in the future to be on the look for potential changes in trend based on 90 degrees/ days and divisions of that period (45 days and 22.5 days).
A spreadsheet of this method can be constructed for your favorite stocks to calculate the dates into the future backward and forwards. In addition, anniversary dates of historically significant highs and lows in themselves are also places in time to look for changes in trends.
Most importantly, the trader must use other forms of technical analysis to confirm a change in trend and should not rely on this method as written in stone for a change in trend. It only points to a tendency and is only additive to one’s trading when taken in conjunction with other confirming signals that a change has a high probability of having occurred.
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