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How to Use the Key Seasonal Date Tendencies

The key date tendencies should serve as a guide or a preselection factor. Look for the following characteristics:

1. Percentage of time up close 75 percent of the time or more

2. Percentage of time down close 75 percent of the time or more

3. Fairly large magnitude of move as shown on the solid line plot

Figures 16-2,16-3, and 16-4 show you my selections for dates in severВэal markets. The process is very simple and does not require much judgВэment as you can see. But this is just the first step. Once the dates and markets have been selected, you will need to apply timing. This will increase your odds for success. It will help filter out trades which will not move in the expected direction.

Here are the steps and rules I use in selecting seasonal dates for trading:

1. Pick your key date trades for the next date.

2. For trades on the long side use buy signals confirming entry only during the day; however, do not buy unless timing confirms the direcВэtion of the move.

3. For trades on the short side use sell signal confirming entry only durВэing the day; however, do not sell unless timing confirms the direction of the move.

It's that simple in terms of the preselection and timing application. There are many timing signals you can use with the seasonals. Figures 16-5, 16-6, and 16-7 illustrate my approach using timing and key date seasonals.

Daily Seasonal Tendencies

Many markets exhibit strong seasonality on a daily basis. Although it could be argued statistically that a lengthier data history is needed for some of the daily seasonals, the fact is that seasonals do exist and that their reliability has been aptly demonstrated and validated by Art Merrill in his classic book, The Behavior of Prices on Wall Street.

Since daily seasonals work best in the most active markets where the largest intraday moves are likely, I urge you to restrict your trading to these markets. In order to assist you in this venture, I am providing you below with my latest daily seasonal listings in S&P, Swiss franc, and T-bond futures in Figures 16-8, 16-9, and 16-10. Note that these listings will change each year as more data are available. Should you wish to acquire up-to-date listings, please contact my office (MBH Commodity Advisors, Inc., P.O. Box 353, Winnetka, 111. 60093). Please read the instructions in Figure 16-8 for interpreting the lists.