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    Seasonal Sector Trades: 2014 Q1 Strategies
    Seasonal Sector Trades: 2014 Q1 Strategies
    Seasonal Sector Trades: 2014 Q1 Strategies
    Ebook240 pages3 hours

    Seasonal Sector Trades: 2014 Q1 Strategies

    By Jeffrey A. Hirsch and John L. Person

    ()

    Read preview

    About this ebook

    Commodity Trader's Almanac is now Seasonal Sector Trades!

    Strategies identifying the best-performing seasonal trades for the first quarter of 2014

    Seasonal tendencies and cycles provide a foundation for profitable trading. This edition of Seasonal Sector Trades contains trade ideas and strategies for the first quarter (Q1) of 2014. It identifies the best trades for each month based on historic tendencies and cycles. A special report is issued covering stocks, bonds, currencies, energy, metals, grains, soft commodities, and meats. Concise and to-the-point, the report describes monthly price tendencies for each market, alerting you to major trading opportunities. An accompanying strategy calendar shows you what to monitor during the beginning, middle, and end of each month.

    In addition to this information, daily exits and entries are provided for trades with the best historic performance. Backstopping the trade ideas are articles on the major trades of the month and in-depth analysis on the historic price patterns of the underlying market. The trading ideas and data allow you to compare current market conditions against historic tendencies and make informed trading decisions along the way.

    • Includes in-depth analysis and data of the seasonal tendencies of all major financial and commodity markets
    • Details trading tips and strategies to maximize profits from suggested trades
    • Based on years of proven historical data

    The culmination of years of painstaking research, this quarterly guide will provide you with the historic knowledge to spot big trades unfolding in today's markets.

    LanguageEnglish
    PublisherWiley
    Release dateDec 17, 2013
    ISBN9781118792711
    Seasonal Sector Trades: 2014 Q1 Strategies

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      Book preview

      Seasonal Sector Trades - Jeffrey A. Hirsch

      1 Introduction

      It is impossible to predict the future. That is why we rely on seasonal and historical analysis to help understand, or better yet, to remind us what price trends have occurred in the past and how often these trends perform. These patterns typically occur as a direct result of perennial supply and demand changes year after year. Every year has differences, from changes in monetary and fiscal policies to global macroeconomic situations to presidential-election-year cycles to extreme weather and other exogenous events.

      After seven lucky years of developing and delivering the annual Commodity Trader’s Almanac we transformed our annual opus into a new, digital-only quarterly report to provide more timely actionable trading analysis to traders and investors in stocks & bonds, energy, metals, grains, softs, meats, and currencies.

      John has created a brand-new proprietary tool for the new publication: price projections based on seasonal expectations and recent trading activity. The proprietary algorithm delineates the price projections for each trade presented at the time of this writing through Q1 2014. Three different scenarios are displayed so that you can better gauge the quality of each seasonality’s trade setup and decide if and how to execute with respect to technical, fundamental, and market sentiment readings at the time.

      Our Q1 Outlook is followed by our full-year Seasonal Trading Strategy Calendar and 2014 Q1 Top Seasonal Sector Trades. Each of the three months of Q1 2014 begins with a concise description of the trading patterns of the seven major complexes: stocks & bonds, energy, metals, grains, softs, meats, and currencies. The complete history and considerations of each top trade are then detailed, including a spreadsheet of the trade, price projection chart, correlated ETF or stock idea and chart, and the seasonal trend.

      To give you a window into How We Trade, we have included several real-world examples of how we incorporate seasonal trade setups with technical and fundamental analysis.

      Use this report as a reference guide and to compare current events against history. We have included the data, which allows the reader to distinguish which years had predominantly bigger price moves to compare where current prices and trends are against past historic data.

      There are a great many tables and charts presented in this report, all including important data. For an up-close view of them, go to www.wiley.com/go/seasonalsectortrades (password season123). There you can also sign up to get notices about the next issue.

      May all your trade executions be profitable!

      Jeffrey A. Hirsch and John L. Person

      Price Projections Within Seasonal Expectations*

      The purpose of Seasonal Sector Trades is to enhance and improve upon the work and analysis provided in the Commodity Traders Almanac. Many years ago when we first began that publication, trading in commodities was becoming a more mainstream investment product. However, as exchange-traded funds (ETFs) took shape, traders and investors began to lose focus on the seasonal supply-and-demand changes that many commodity markets demonstrated throughout the year. In addition, what we brought to the table and introduced investors to for the very first time in a publication was the various ETFs and stocks that held a tight correlation to the seasonal price swings of an underlying commodity product.

      For example, there is the typical seasonal decline that occurs in early fall with Crude Oil prices and the relationship with (USO) the oil ETF or the refiners like Exxon Mobil (XOM) or Conoco Phillips (COP) (see the accompanying chart). Many of our readers were impressed by the correlations in the Agricultural markets such as the grain complex and the moves associated with stocks in that group like Monsanto (MON), John Deere (DE), and fertilizer names like Potash (POT) (see the following chart). Individual retail speculators along with institutional traders found the research and analysis in the foreign markets extremely helpful, especially in light of the fact that many were unaware of the influences that create the seasonal factors on the various foreign currencies.

      As with any form of market analysis, the key issue to remember is there is no one single Holy Grail method. What we try to do is to improve our probabilities of success and to get an edge over the competition. Seasonal analysis does just that: It alerts us in advance of what the market might do based on past trends that a specific market has demonstrated. But present market conditions may have a magnified, muted, or negative impact on the seasonal influence of a product or market segment price move in the future. It is this reasoning that led John to develop his new proprietary analysis tool: Price Projections Within Seasonal Expectations.

      This brand-new tool is being introduced here to readers in our inaugural issue of Seasonal Sector Trades. Throughout this publication we provide to the reader three targeted price trends based on seasonal patterns and recent trading conditions at the time of publication: Bullish, Neutral, and Bearish.

      Crude Oil NY (Comb) CONT LIQ @ NYMEX (WEEKLY BARS)

      Chart courtesy of www.tradenavigator.com ©1999–2013.

      Soybeans CBT (Comb) CONT LIQ @ CBOT (WEEKLY BARS)

      Chart courtesy of www.tradenavigator.com ©1999–2013.

      Seasonal Sector Trades will provide on a quarterly basis the expected price targets based on a proprietary algorithm within those market condition assumptions. If the seasonal trend for a specific market is up, then the assumption is we should be in a bullish trend and the price support and resistance projections are highlighted on the chart in green. If the market is in a seasonally strong period, but due to market conditions the price move is muted, we give a neutral price target or lower price support and resistance targets in blue. Lastly, if bearish market conditions have a negative impact on a market, we give an estimated price target for a down-trending price environment in red. See the example for the S&P 500 in the accompanying chart.

      Considering the complexities of a global economy, especially with many foreign central banks intervening with loose monetary policies by means of quantitative easing, predicting or anticipating a market’s moves or price trends has become even more difficult. That is why this new Seasonal Sector Trades publication is in demand. It alerts traders and investors to what the expected trend of the market could be based on past price action and historical seasonal patterns. Projected price targets will help readers to develop an institutional-type investment and trading plan based on the projected price targets and seasonal trends. Armed with this information you will now be able anticipate the duration of a seasonal trend for a given quarter as well as the price assumptions under specific market conditions. Options traders can now look at the selected expiration dates and strike prices that meet these price outlooks.

      This latest innovation in market research, using price projections within seasonal expectations, should enable you to set more manageable risk parameters as well as profit objectives in a timely manner in order to decide what type of trade or trading strategy to implement, whether using ETFs, futures, stocks, or complex options strategies.

      E-Mini S&P 500 CONT LIQ @ CME (WEEKLY BARS)

      Chart courtesy of www.tradenavigator.com ©1999–2013.

      Notes

      *To access online versions of all figures and tables, please visit www.wiley.com/go/seasonalsectortrades (password season123).

      2 Overview of the Quarter*

      For most of us it may be difficult to plan or think about what may happen 30 days in advance, let alone an entire quarter. As for the markets, our goal in Seasonal Sector Trades is to help individual traders and investors alleviate that stress, and perhaps give valuable insights into potential trend changes for the various markets.

      With that stated, we see the first quarter of 2014 as a challenge for the U.S. Federal Reserve to wean itself off of its quantitative-easing bond-buying program. We are also not convinced that we will have a major improvement in the unemployment numbers or a more unified government that is able to set a balanced budget, lower spending, and

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