Seasonality and High-Odds Seasonal Setups
Summary
One of the most enduring and reliable patterns in the markets is seasonality. While some people believe that seasonality is a function of weather or the seasons, this is not entirely true. Seasonality is the tendency for markets to move in certain directions during certain times of the year. These moves are caused by factors such as weather, harvest, planting, inventory build-up, holiday closing of mines, buying of building supplies prior to the building season, quarterly mutual fund portfolio adjustment, summer demand for meat, holiday demand for pork and poultry, summer unemployment increases, and a host of other variables. This chapter introduces the types of seasonal pattern in market such as monthly seasonal patterns, weekly seasonal patterns, daily seasonal futures patterns, preholiday seasonal patterns and seasonal patterns in spread and ratio relationships.