Time Cycle Correlation and Trading

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One of the characteristics that successful short-term traders share

is an understanding of time cycles and periodicity. An intraday

trader should know the most statistically favorable bullish and

bearish times to trade. For example, on an annual basis, November,

December, and January are typically the most bullish months of the

year. Conversely, the most bearish months of the year tend to be

September and October, followed by February and June. If a strong

bear market is in progress, it will tend to end in October. Bear market

trends that begin in February or March tend to end in June. In

some cases, summer rallies tend to end in June. Always know where

you are in the annual cycle. Identify whether you are in a statistically

bullish or bearish month. Of course, these rules of thumb do

not always hold true, but annual cycles typically manifest themselves

over and over again.

The best-performing days of the week tend to be Monday,

Wednesday, and Friday. Currently, these days seem to have the

most bullish tendency and tend to trend strongly. Another interesting

and potentially profitable bit of statistical information is that the

most bullish days in a given month tend to be the first three days

and the last four days of the month.

The time periods that exhibit the most definable trends on the

S&P 500 and the Dow Jones are 9:30 to 11:00 A.M. EST and 2:30 to 4:00

P.M. EST. Of particular importance are the last 45 minutes of the trading

day. It is during this time frame that trend will either reverse or

continue trending in the direction of the previous hour.

One of the characteristics that successful short-term traders share

is an understanding of time cycles and periodicity. An intraday

trader should know the most statistically favorable bullish and

bearish times to trade. For example, on an annual basis, November,

December, and January are typically the most bullish months of the

year. Conversely, the most bearish months of the year tend to be

September and October, followed by February and June. If a strong

bear market is in progress, it will tend to end in October. Bear market

trends that begin in February or March tend to end in June. In

some cases, summer rallies tend to end in June. Always know where

you are in the annual cycle. Identify whether you are in a statistically

bullish or bearish month. Of course, these rules of thumb do

not always hold true, but annual cycles typically manifest themselves

over and over again.

The best-performing days of the week tend to be Monday,

Wednesday, and Friday. Currently, these days seem to have the

most bullish tendency and tend to trend strongly. Another interesting

and potentially profitable bit of statistical information is that the

most bullish days in a given month tend to be the first three days

and the last four days of the month.

The time periods that exhibit the most definable trends on the

S&P 500 and the Dow Jones are 9:30 to 11:00 A.M. EST and 2:30 to 4:00

P.M. EST. Of particular importance are the last 45 minutes of the trading

day. It is during this time frame that trend will either reverse or

continue trending in the direction of the previous hour.