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103-ICT Mentorship Core Content - Month 10 - Stock Trading - Seasonals and Monthly Swings

Last modified by Drunk Monkey on 2022-10-26 08:54
1 00:00:10,290 --> 00:00:19,260 ICT: Hey folks, welcome back. We're in the final week of June 2017. Is ICT mentorship content, this week's lessons are gonna be focusing on one of the ICT
2 00:00:19,260 --> 00:00:23,580 stock trading. This is Lesson One seasonal and monthly swings.
3 00:00:30,150 --> 00:00:43,590 Okay, folks, Dow Jones Industrial seasonal tendency. And this is credited to more research. Steve Moore has the absolute best seasonal tendencies that are
4 00:00:43,590 --> 00:00:56,880 made available for active traders. And I'm looking at the overall directional seasonal for just the Dow Jones Industrial Average. Now, you can go crazy and
5 00:00:56,880 --> 00:01:06,030 try to look at the NASDAQ and the s&p 500. But the simplest thing for me to do was to simply look at the Dow Jones Industrial. Now, it's a small sample size of
6 00:01:06,030 --> 00:01:16,110 30 stocks, 30 Blue Chip companies, some of the biggest companies in North American continent. So they're publicly traded. And if they're doing very well,
7 00:01:16,110 --> 00:01:25,170 generally, the s&p is only doing very well. And NASDAQ while it's heavy and tech, it can still be very good barometer in terms of what the stock market as a
8 00:01:25,170 --> 00:01:37,770 whole should be doing. Now, personally, I believe that the seasonal tendency is very closely mirrored to that of the s&p 500. For s&p 500, I think is a more
9 00:01:37,770 --> 00:01:49,200 accurate depiction of what the stock market is doing. So we'll always refer to what this general basic generic, seasonal tendency is implying, but we'll be
10 00:01:49,200 --> 00:01:59,190 using it with the s&p 500. Also, in later lessons, that will we can filter out the strengths or weaknesses in the averages to bolster either confidence in
11 00:01:59,190 --> 00:02:10,860 higher or lower prices. Okay, the first thing I want to bring your attention to is, there's three divisions in the year, when it comes to stock trading, there's
12 00:02:10,860 --> 00:02:19,830 a lot of people that try to trade stocks a lot more actively than they should. A lot of folks try to invest in stocks more actively than they should. And a lot
13 00:02:19,830 --> 00:02:28,950 of people think they know something about stocks when they don't. So just this, this lesson alone will put you in the front of the pack as it relates to
14 00:02:29,010 --> 00:02:38,490 equities trading, the first half of the year, there's generally going to be a large or high magnitude period, that means there's going to be a lot of
15 00:02:38,490 --> 00:02:50,160 volatility, but it's going to be directionally driven. Generally, it's going to be bullish. The second portion of the year, I want to talk about is the last
16 00:02:50,160 --> 00:02:59,820 quarter of the year. And that's generally been primarily a bullish time of the year as well. I've spoke many times in extensive detail about why the last
17 00:02:59,820 --> 00:03:11,400 portion of the calendar year in the US is strongest because it's laden with holidays, and urine spending has to come in. So it's going to cause a lot of
18 00:03:11,400 --> 00:03:23,760 energy. And you can see there's a very strong contrast to the magnitude and the velocity at which it goes higher in the later portion of the year, in contrast
19 00:03:23,760 --> 00:03:34,440 to the first portion. So that's the first and the second segments of the calendar year for stocks. The last and most critical one you need to understand
20 00:03:34,470 --> 00:03:46,980 is this portion in the middle. This whole area right in here that's boxed in this is what is referred to as low magnitude period. And it begins in May, and
21 00:03:47,040 --> 00:03:58,350 ends in October. So May to October, generally, you're going to be seeing a lot less directionally driven markets. Now it does not mean that you won't have
22 00:03:58,590 --> 00:04:08,670 short term directional biases and or opportunities, it just means that if you're gonna be trading, do a lot less leverage. If you're gonna be trading options, do
23 00:04:08,670 --> 00:04:19,770 a lot less activity. Don't be so aggressive during these periods of the year. You have all summer months, you'll have seasonal lols in spending because a lot
24 00:04:19,770 --> 00:04:30,300 of people are looking to spend money in vacations and other things like that. So there's going to be a lot of cyclical things that take place and non cyclical
25 00:04:30,300 --> 00:04:39,330 things that take place yearly. Main thing is during these periods or these months, you want to be looking for a range bound consolidation environment
26 00:04:39,330 --> 00:04:48,810 overall. Now they're individually going to have their respective seasonal tendency to month by month. But you primarily want to focus on being a trader
27 00:04:48,900 --> 00:05:04,320 from October to the end of the year, and from February to May. Alright, Dow Jones Industrial seasonals We're going to be breaking it down month by month. So
28 00:05:04,320 --> 00:05:15,630 seasonal influences per calendar month for the Dow Jones Industrial January typically is going to be a bearish month February is typically going to be a
29 00:05:15,630 --> 00:05:25,860 bullish month. March generally is seen as a consolidation month. April typically is a bullish month
30 00:05:28,139 --> 00:05:43,379 May is typically a bearish month and June is a consolidation ending with a bearish tone. July is bullish into the mid year high. August is generally seen
31 00:05:43,379 --> 00:05:58,289 as a consolidation month. September is split between the first half being bullish, and the second half being bearish. Act October usually makes the final
32 00:05:58,289 --> 00:06:06,539 quarter of the years low. It can happen in September as well during that second half of the month of September. So while it's bearish, it may drop down like a
33 00:06:06,539 --> 00:06:18,239 seasonal low there. Or in October, it could make the low and trade aggressively higher. November is typically a bullish month. And finally, December is
34 00:06:18,239 --> 00:06:30,419 generally a Santa Claus Rally bullish month. So here we have the entire calendar year, in broad brush terms, generic terms, whether we should be expecting higher
35 00:06:30,419 --> 00:06:40,469 prices or lower prices. Now, this is being conveyed to you by way of looking at a 20 year average a 15 year average and a five year average. So if you look at
36 00:06:40,469 --> 00:06:50,129 the overall consolidations and expansions, and when it's trending when it's not trending when it's going higher when it's not going higher. There there very
37 00:06:50,129 --> 00:07:01,439 closely correlated in terms of what they're doing the blue and the red line. So if we see this, it in my opinion, it bolsters confidence behind the number
38 00:07:01,439 --> 00:07:10,499 crunching out of seasonal tendencies. Because it's going to average over the last 20 years to go higher. In February, it's going to average that same thing
39 00:07:10,499 --> 00:07:23,129 and 15 years of data. It's been reflected in both. So in different timeframes of now analyzing the data, it speaks volumes to me in terms of consistency. Now,
40 00:07:23,129 --> 00:07:33,329 consistency is not high probability or perfection or panacea. Beyond endo absolutely no risk, it means that probabilities are historically speaking in
41 00:07:33,629 --> 00:07:43,199 obviously, nothing is guaranteed by looking in the past. But if we're going to assume there is a pattern to this, and we're going to be using seasonal
42 00:07:43,199 --> 00:07:54,749 tendencies, I think this is one that's worth looking into. So breaking them the calendar months, as we've done here, gives us a pretty strong consensus about
43 00:07:54,749 --> 00:08:04,379 what we should be doing each month, if we're going to be short term or swing trading stocks. Also, we can be looking at it for day trading the s&p and for
44 00:08:04,559 --> 00:08:14,429 really astute about everything. And if you look also, we have months where we know that there's going to be far less likely to have an opportunity with high
45 00:08:14,429 --> 00:08:28,769 probabilities and those are March, June, August, all those months typically are going to be not fruitful in terms of high probability conditions. Now, I already
46 00:08:28,769 --> 00:08:35,909 know some of you that's probably going to hear this, it's done some stock trading or whatever, you're gonna say, Well, what about this month in August of
47 00:08:35,909 --> 00:08:46,409 this year, or that year, and there's always going to be some aberration where it just simply doesn't fit the seasonal? And that's okay, that's fine. There's
48 00:08:46,409 --> 00:08:53,549 gonna be many times when the mounts that are suggested here is bullish or bearish, it won't be that there'll be the opposite. It's going to be based
49 00:08:53,549 --> 00:09:02,549 largely on the underlying trends are the environments of the marketplace. But because the seasonal tendency is really highlighting the underlying tendency for
50 00:09:02,759 --> 00:09:13,889 stocks to be purchased, bought and held, then it's obviously going to show the strongest buy sides and seasonal tendencies. So while the market is bullish, if
51 00:09:13,889 --> 00:09:22,949 we look at the bullish months, those will indicate in my opinion, the best opportunity to be looking to be swing trading long stocks. Now the bearish
52 00:09:22,949 --> 00:09:32,459 months. What we'll be looking for is even during strong periods in the last 20 years or so, when the stock market's been going higher, if we see that there are
53 00:09:32,459 --> 00:09:43,499 typically months in the year, like may generally is a bearish month and the second half of September is generally a bearish month. Those in January as well
54 00:09:43,499 --> 00:09:54,989 being a bearish month, those months if they are bearish even in underlying bull markets, they could spell aggressive selling in bear markets. So if we focused
55 00:09:54,989 --> 00:10:03,989 on those months when the markets generally going lower the tide as a whole is moving lower. that could actually become really supercharged short selling
56 00:10:04,019 --> 00:10:11,099 months where we can be looking for sellers in weak stocks or bearish on s&p trading.
57 00:10:16,440 --> 00:10:23,520 Okay, so we're gonna look at a couple of case studies here, I'm not going to do the entire calendar year because I want to inspire you to go to bar chart.com
58 00:10:23,520 --> 00:10:32,880 and pull up the individual months yourself. And you can go back and look at all that data by simply putting in the beginning and the ending dates of each
59 00:10:32,880 --> 00:10:44,160 calendar. And using the respective delivery contracts. March, June, September and December contracts. And you can look at the contract codes from the previous
60 00:10:44,550 --> 00:10:51,930 lessons in this month, where I actually gave you the delivery contract month codes, and how it pull up the year and all that for each symbol. So we're
61 00:10:51,930 --> 00:11:01,890 looking at the first one here, and that's going to be seen for the month of February. And we obviously knew looking at the previous slide, that February
62 00:11:01,890 --> 00:11:09,750 generally is a bullish month, seasonally speaking. So on the chart here, on the right hand side, we're looking to major stock averages, the top chart is going
63 00:11:09,750 --> 00:11:20,490 to be the NASDAQ, the middle chart is going to be the E Mini s&p, and the Dow Jones is seen at the lower end. And I'm using the futures contract just to just
64 00:11:20,490 --> 00:11:28,290 show the representation of it, it doesn't have to be the futures chart, you can use the cash prices, it's still going to speak the same thing. But I want you to
65 00:11:28,290 --> 00:11:42,120 look at the second third of February, you can see that the NASDAQ made equal low, while the s&p and the Dow failed to go to the equal low and actually made
66 00:11:42,120 --> 00:11:53,220 higher lows. So that's our criteria that we look for, we want to see strong tendencies to see an unwillingness to go lower, and there's our index s&p that
67 00:11:53,220 --> 00:12:05,370 we looked at during the s&p trading content. So we see the indices starting to show signs of Smart Money accumulation. And even later in the month, during the
68 00:12:05,370 --> 00:12:17,940 period of the sixth to the eighth trading day, you can see that the NASDAQ made a higher low, the s&p made a lower low and the Dow Jones made a slightly higher
69 00:12:17,940 --> 00:12:30,750 low, and then we saw another movement higher across the averages. Okay, we're gonna be looking at the next one here. And this is going to be looking at March
70 00:12:30,750 --> 00:12:39,300 and you can see here in the shaded area, March generally is a consolidation period, it does have its little whipsaws of higher and lower prices. And if you
71 00:12:39,300 --> 00:12:47,100 really want to get aggressive about it, you can see during the second week of March down into the third week of March, generally is bearish. And then it
72 00:12:47,100 --> 00:12:58,260 starts to rally towards the close of March. And you can see that generally communicated here with the index divergence as well, with the NASDAQ making
73 00:12:58,260 --> 00:13:11,670 higher highs and the s&p in the middle making lower highs while the Dow Jones futures was making lower highs as well. And you can see the resulting sell off
74 00:13:11,730 --> 00:13:21,360 and then at the lows between the 21st and the 26th. You can see the divergence, which I'm not going to highlight here I want you to look at and study but you
75 00:13:21,360 --> 00:13:33,540 can see the NASDAQ has a higher low comparable to the lows that are seen in the E Mini s&p and the Dow futures contract. So you can see there is a subsequent
76 00:13:33,540 --> 00:13:41,640 rally higher across the major three averages. So while it's consolidation, it doesn't mean that there isn't any opportunity to just means that you don't have
77 00:13:41,640 --> 00:13:52,350 to look at what you're looking at in terms of context. And you can see generally it's consolidation the entire month Okay, the next one here, we're gonna be
78 00:13:52,350 --> 00:14:04,590 looking at the month of April. And I have the contracts for the NASDAQ Emini, s&p at the bottom and down in the center this time. When you can see the
79 00:14:04,590 --> 00:14:17,040 divergence that's indicating smart money is accumulating stocks, with the NASDAQ failing to make a lower low while the Dow went lower, and the s&p failed to go
80 00:14:17,040 --> 00:14:26,040 lower. So index divergence there and we have a nice movement higher the same time, we're seeing that mid month of April that's in the seasonal tendency
81 00:14:26,160 --> 00:14:35,940 because it starts off a slightly bearish tone, and then it bolts aggressively up into ends of April. And you can see that actually occurring here in all the
82 00:14:35,940 --> 00:14:36,600 averages.
83 00:14:42,480 --> 00:14:48,930 Okay, our final example here, we're gonna be looking at the month of May and that's seen here seasonally on the left hand side, so it's certainly a bearish
84 00:14:48,930 --> 00:15:03,150 month. And you can see looking at the averages on the right hand side, the Emini s&p is the top chart this time it makes a slightly higher high A while the Dow
85 00:15:03,150 --> 00:15:14,640 futures fails to make a higher high and the Nasdaq does in fact make a higher high. And we have a sell off into the midpoint almost the third week of May. And
86 00:15:14,640 --> 00:15:21,840 you see that little flurry higher and the seasonal tendency on the left hand side as it goes into the close of the month. And that same thing is being seen
87 00:15:21,840 --> 00:15:33,390 here in May as well. So it creates a seasonal low, intra month. But overall, it's generally a bearish month as a whole. So now, having brought this up and
88 00:15:33,390 --> 00:15:49,410 mentioning it to you, as a reminder, the month of 2017 May, is part of a larger consolidation that's been seen in this year of the recording, I'm making 2017.
89 00:15:49,770 --> 00:16:05,700 It's been an unorthodox stock market right now. It's been a market that keeps finding higher highs, but it's doing so with stocks that are formerly pushing
90 00:16:05,700 --> 00:16:14,640 higher, to general market averages. They're starting to lose their highs and lows. They're not making the highs. So the markets actually making higher highs
91 00:16:14,640 --> 00:16:26,250 but doing it with a lot of the leadership not doing it anymore. So there's going to be times when the stock market's going to defy all logic, it's going to do
92 00:16:26,250 --> 00:16:38,550 whatever you think it's not going to do, it's going to do that very thing and vice versa. So if you're going to be trading stocks, in my opinion, it's better
93 00:16:38,730 --> 00:16:52,050 to focus on times when the market is predisposed to go higher, and not be such a bubble, like I believe we are in the year 2017. I think that if you are going to
94 00:16:52,860 --> 00:17:06,510 be a trader that uses investment ideas like IRAs or retirement accounts, if it's possible for you where you live globally, if you could do it as a self directed,
95 00:17:06,990 --> 00:17:18,960 medium, and trade, your own choices and your own selections about what stocks you should be in and when to get out. Doing that I believe will supercharge your
96 00:17:18,960 --> 00:17:26,460 return, and you're not going to have someone do any better job than you in terms of caring about your money. You care about the money you worked for it, you
97 00:17:26,460 --> 00:17:35,970 obtained it by inheritance, you done whatever you done, okay, individually, they received that money, okay. And generally most of us had to work hard to get it.
98 00:17:36,000 --> 00:17:48,060 So we're going to care about losing it, folks that are at these firms that supposedly are you looking out for our best interest, they aren't really looking
99 00:17:48,060 --> 00:17:57,660 out for your best interest in Contactually. They're not even obligated to do that, surprisingly, when you look at it closely. So it's a it's a market that
100 00:17:57,660 --> 00:18:06,990 always propels new suckers. There's always a new crowd of willing participants. And it doesn't matter what kind of market we've seen, there's always someone
101 00:18:06,990 --> 00:18:15,930 willing to put money into it, because the idea is perpetual. invest for the future, invest for tax deduction, to tax the firm and all that stuff, and you
102 00:18:15,930 --> 00:18:25,080 all retire rich at the end. And then we have these major stock market crashes and corrections and all these things. And many times people may have had a lot
103 00:18:25,080 --> 00:18:33,570 of paper profit. But something happens along the line, they don't have nowhere near as much as they thought they were going to have or at one time. So as an
104 00:18:33,570 --> 00:18:41,400 investor in stocks, I still think that you need to be a trader. In stocks, there's times when you want to be in stocks and times you want to be out of
105 00:18:41,400 --> 00:18:54,330 stocks. And we are focusing with this teaching here in this entire week of presentations. When it's ideal based on past information, you're looking at
106 00:18:54,330 --> 00:19:06,060 cyclically, seasonally, and statistically where things usually come to fruition. So if we can focus on those little sweet spots, if you will, for investing in
107 00:19:06,060 --> 00:19:16,650 stocks, if anything will at least, hopefully be advantageous for us to do so, versus just trying to buy stocks because you know, because Jim Cramer or
108 00:19:16,650 --> 00:19:27,630 somebody else on the top was in tells us we should be doing so that's not an idea that should be followed. So if we do things in our own analysis, and we get
109 00:19:27,630 --> 00:19:38,940 to the outcome that delivers a consistent return that outpaces and outperforms the market, which I believe the concepts I'm teaching you this week, will do a
110 00:19:38,940 --> 00:19:41,670 better job than the general averages. Okay, there's
111 00:19:41,970 --> 00:19:52,890 there's a lot of misnomers as as it relates to what the stock market average return is per year because of all these number crunching things. Just forget all
112 00:19:52,890 --> 00:20:00,300 that don't even have an idea what you should have in terms of return. Because you're probably going to do well well different than what you thought you're
113 00:20:00,300 --> 00:20:07,770 going to do. And many times, ideally, you'll outperform what your lowest expectation was going to be, and maybe even your highest expectation. So I'm
114 00:20:07,770 --> 00:20:19,500 yours. So as we go through this week's material, just understand that it's aimed at number one, providing another asset class to us if it isn't interesting to
115 00:20:19,500 --> 00:20:26,310 you, or if you have a medium where you can do retirement accounts. And you can do as a self directed medium where you're you're picking and choosing when
116 00:20:26,310 --> 00:20:36,930 you're getting intimate and what stocks you're owning. The other lessons by looking at stocks will be covered in an additional video that will be after the
117 00:20:36,930 --> 00:20:45,480 fifth lesson. So they'll actually be six videos this week. So you'll have six videos for this particular week, and then we'll close out the session for the
118 00:20:45,480 --> 00:20:52,830 month of June. But I'm confident by the end of this week, you'll know a lot more about stocks than the average person does. Certainly everyone on the YouTube
119 00:20:53,160 --> 00:20:58,320 that's supposed to be making money and getting rich on it. So until our next lesson, I wish you good luck and good trading