Does It Always Work This Way?

Seasonal analysis of stocks is merely an identification of likely recurring patterns of institutional participation. Institutional traders get to know a set of companies, and their stocks, inside and out. And especially with the companies that may have seasonal sales patterns, a smart trader will come back year after year and ‘play the odds' that a certain pattern in the stock may repeat itself.

Of course, over time, this can be a self-fulfilling exercise. A stock moves around a logically significant time of the year, making many analysts take note, and next year, there are many more traders ‘playing the odds'.

In the March 3rd Seasonal Forecaster newsletter, I pointed out a stock that has a very logical seasonal pattern. Harley Davidson (HOG), the maker of those iconic motorcycles that for some reason don't sell well in the middle of winter but seem to fly out the door as soon as spring blossoms, has an unsurprising pattern in its stock.

I pointed out that from the first week of March through the next several weeks, HOG prices rise:

One period with a reliable success rate is the 8-week period. HOG has averaged an 11.7% gain, with gains in 21 out of 27 years. And double-digit gains are not uncommon, something that should interest option traders.

I also pointed out that the technicals were lined up at the beginning of March. HOG had just broken above recent resistance on increasing volume. A setup like this increased the chances of a trade based on the seasonal pattern working.

So how did HOG do? It has been 9 weeks since the first week of March. HOG happens to be up 11.2% since March 3rd, nearly matching the historical average. Actually, last week it was up as much as 13.4%.

So, does it always work this way? No. But combining seasonal analysis with good fundamental and technical analysis increases the odds of short-term trades. It is identifying the likelihood of institutional participation, and it is institutional participation that moves a stock.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

Copyright (C) 2014 Stock & Options Training LLC

Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.

Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.

Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.

As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.

The content on any of Market Tamer websites, products, or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options, and other securities involve risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities are not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options (http://www.optionsclearing.com/publications/risks/riskstoc.pdf). The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.

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