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91-ICT Mentorship Core Content - Month 10 - Commodity Seasonals Tendencies - My Personal Favorites

Last modified by Drunk Monkey on 2022-10-18 12:02
1 00:00:02,790 --> 00:00:11,580 ICT: Okay, folks, welcome back. Before we get into the topic, it's very important that we remind ourselves that this is a commodity market discussion.
2 00:00:12,060 --> 00:00:20,040 And it's important that you read the disclaimers here. I'm not a CTA, I'm not a commodity trade advisor. So it's very important that you understand everything
3 00:00:20,040 --> 00:00:33,840 we say here is all specifically talking about paper trading only. Hey, folks, welcome back to lesson three. This is June 2017, iced tea mentorship, commodity
4 00:00:33,840 --> 00:00:37,710 trading, lesson number three seasonal tendencies, my personal favorites.
5 00:00:44,760 --> 00:00:50,970 Okay, we're looking at the first in our list, and we're gonna be talking about the agricultural markets first, and then we'll go into the financials. But
6 00:00:50,970 --> 00:01:00,090 before I begin, I want to number one, stress that panaceas don't exist, be all end all don't exist in trading. And certainly seasonal tendencies are not one,
7 00:01:00,690 --> 00:01:12,120 why my personal belief is that there's validity behind them. Because of human error, because of the seasonal tendency, not taking effect of the time of a
8 00:01:12,120 --> 00:01:20,190 trader sitting down and trying to implement them. Just know that you can lose money if you try to place all your faith on seasonal tendencies. But my personal
9 00:01:20,190 --> 00:01:28,680 interpretation of seasonal tendencies are, it's like a roadmap, or like a treasure map, if you will, it kind of like gives me the normal expectation of
10 00:01:28,680 --> 00:01:37,440 what should normally be seen in price action that time of year. Now, anything can happen. Obviously, with agricultural, there could be a drought, there could
11 00:01:37,440 --> 00:01:46,230 be a bumper crop, meaning there's a lot of supply, and a drought would create a short supply and demand would go up. And obviously the prices go through the
12 00:01:46,230 --> 00:01:56,190 roof. But when we have these seasonal tendencies, again, it's important that we remind ourselves like I did when I mentioned them earlier in the mentorship that
13 00:01:56,670 --> 00:02:07,800 they're not panaceas, they are not going to be absolute. But they're good roadmaps as to what to expect for each individual, in this case, commodity. So
14 00:02:08,700 --> 00:02:20,310 the first in our list here, the seasonal tendency for the soybean market. On the left hand side of every slide I show you, I'm going to present the seasonal
15 00:02:20,310 --> 00:02:29,220 tendency on the left, and then a weekly chart over the last five years. So that way, you can look in price and form for your own opinion, whether whether
16 00:02:29,220 --> 00:02:42,570 there's any validity to having these seasonal tendencies in our toolbox at all, I believe, by your study and your interest. By seeing whether these things come
17 00:02:42,570 --> 00:02:53,790 to fruition or not in old data, I think you'll come to the conclusion like I did, that there's something going on that, in my opinion, provides validity and
18 00:02:54,780 --> 00:03:04,530 not entire trust, but certainly one to look for reasons to expect the market to perform, as we would see in the seasonal tendency, if we don't see the market
19 00:03:04,530 --> 00:03:12,960 trading in line with with the seasonal tendencies implying that actually gives us insight as well. So if at a time when it should be bullish, for instance,
20 00:03:12,960 --> 00:03:25,650 with the soybean markets, usually the first of February going into the June time period, usually the bulls time period for soybean market. But if the markets
21 00:03:25,680 --> 00:03:35,160 actually trading lower, what does that tell you? It means seasonally, and influences are not under influence at all. They have no input impact at all on
22 00:03:35,160 --> 00:03:47,880 price. And there's probably something underlying that's heavily slanted towards a big supply of soybeans. And otherwise, the normal function for higher prices
23 00:03:47,880 --> 00:03:57,630 and markup in the price for soybeans isn't being seen. So if we're seeing bearishness during the first half or so of the year, that means there's probably
24 00:03:57,630 --> 00:04:09,210 a whole lot of soybeans, you know, that's available and there's only so much supply that demand will push prices higher. But if there is a condition where
25 00:04:09,210 --> 00:04:18,930 we're expecting bullishness like we see here in the first half of the year generally if that occurs, and we are in a primary bull market or other reasons
26 00:04:18,990 --> 00:04:27,390 that would support bullishness are seen in price action, then we can look for the seasonal tendency to support a sustain move going into the middle of the
27 00:04:27,390 --> 00:04:39,510 year. Interesting enough June time period going into July, creates a seasonal tendency to create a high then usually it trades down into the September October
28 00:04:39,510 --> 00:04:49,320 time period where it creates another seasonal well. If we look at the top of every one of these seasonal tendencies, you're gonna see a small little yellow
29 00:04:49,320 --> 00:04:59,550 box here and the first in this series from left to right. You see em er, it stands for the March delivery contract for soybeans. The next delivery contract
30 00:04:59,550 --> 00:05:07,800 when March contract expires, you can no longer trade that contract, you have to trade the next month, which would be May, when may expires, you have to trade
31 00:05:07,800 --> 00:05:16,500 July on July expires, you have to trade August, August expires at the trade September, when September expires, you can trade November when November expires,
32 00:05:17,340 --> 00:05:25,620 the next month would be January. Obviously, you want to always try to trade the first or nearby month because that's where all the open interest is generally,
33 00:05:26,160 --> 00:05:35,340 there's a few commodities that don't always operate like that, like gold usually has a tendency to skip a month in the latter portions of the year.
34 00:05:37,980 --> 00:05:47,430 But easiest way to do is go into the bar chart.com. And you pull up the contracts that you would be doing your analysis on this look at open interest in
35 00:05:47,430 --> 00:05:57,330 volume, whatever has the highest one, that's usually the contract you're gonna be looking at, or looking to trade. On the seasonal tendencies, there's two
36 00:05:57,330 --> 00:06:05,700 lines, there's a solid black line, which delineates 40 years of price data. So that way, we can look at the seasonal tendency pattern for the last 40 years.
37 00:06:06,330 --> 00:06:18,300 And Steve Moore who creates this wonderful resource also plotted a 15 year seasonal tenancy pattern. And the reason for doing that is when we have a short
38 00:06:18,300 --> 00:06:31,830 term view of a tenancy or data and you compare it with a longer term, sample size, like 40 years contrasted with 15 years of the same information. If there
39 00:06:31,830 --> 00:06:43,830 is a strong seasonal tendency there, that means we should be able to see it both in the short term 15 year data and the 40 year. And you can see by contrast, the
40 00:06:44,340 --> 00:06:55,110 heavy solid black line and the dashed red line pretty much move lockstep the same direction. So and when we look at the seasonal tendency, we were looking
41 00:06:55,110 --> 00:07:05,220 for that criteria where both of them agree to create a higher low and sustain moves. In this case for soybeans, we can see the first of February, there's a
42 00:07:05,220 --> 00:07:14,400 seasonal tendency for soybeans, the rally going up into the mid portion of the year, June, or July. And in June, July, we create a high end trades down into
43 00:07:14,400 --> 00:07:23,340 September, October and creating another seasonal low. On the right hand side of every one of the slides I'm going to provide you in this teaching, I am not
44 00:07:23,340 --> 00:07:33,780 doing any markups at all. Because I do not want to give the impression or imply that these seasonal tendencies are absolute. I'm not trying to over prove them.
45 00:07:34,260 --> 00:07:43,470 I'm only suggesting that you look at the data and you tell for yourself whether there's any validity to it. Okay, and don't just use the last five years data
46 00:07:43,470 --> 00:07:52,740 like I'm showing you here, go back as far as you possibly can, and see if these things do in fact, materialize. And I think you're gonna be rather surprised
47 00:07:52,740 --> 00:08:03,210 when you see how consistent many of them are. So we know that there is a seasonal tendency for price for soybeans to rally around the beginning of the
48 00:08:03,210 --> 00:08:13,080 year. So we can look for the January delineation at the bottom of the weekly chart on the right hand side. And we should see price rally up into July. And if
49 00:08:13,080 --> 00:08:22,050 you look at January 2013 file, follow that up with your eye. You'll see there's a low and he trades all the way up into July of that year. Very phenomenal.
50 00:08:22,530 --> 00:08:32,460 Very, very consistent with the seasonal tendency. Then in July, we expect price to trade down into a fall September October time period. And it creates a
51 00:08:32,460 --> 00:08:48,270 seasonal low in October and consolidates a little bit and then rallies again in January of 2014 into the June month creating a high for 2014 trading all the way
52 00:08:48,270 --> 00:09:02,130 down into what yep, you guessed it, the September October low for 2014. The 2016 time period you can see that this season influenced for price to rally for
53 00:09:02,130 --> 00:09:12,060 soybeans comes into effect again, making the high in the month of June of 2016. Then trading lower making the low in October. So I'm going to counsel you to
54 00:09:12,060 --> 00:09:25,110 weigh it out for yourself whether or not there's a seasonal tendency here. So if we are a commodity trader in the making, and we want to paper trade and see if
55 00:09:25,110 --> 00:09:33,810 there's any validity to these things we know that there are strong tendencies to trade soybeans, three ways look for Long's from February going into June July.
56 00:09:34,170 --> 00:09:44,130 Look for shorts from June July down into September October. Look for long September October going into the following rotation in the summer months. Now
57 00:09:44,130 --> 00:09:50,880 that may break up into two stages or two legs in price action. But that's how you use the seasonal tendency or at least how I interpreted it and how it's
58 00:09:50,910 --> 00:10:02,040 served me well over the last 20 years. The next seasonal tendency is Chicago Board of Trade with Wheat. Now this one's a little funky.
59 00:10:02,640 --> 00:10:14,370 But it's when it's there, it's solid. There is a seasonal tendency for wheat to decline the first half of the year and then make a low second half of June. And
60 00:10:14,460 --> 00:10:24,150 in August, so we have a little bit of a time period between four to six weeks where the low could form. And if we look at the July time period on the weekly
61 00:10:24,150 --> 00:10:38,730 chart, you can see that there's generally a rally like in 2012, we see the rally in wheat. And in the 2013 year, we saw price declined a little bit that year
62 00:10:38,730 --> 00:10:57,600 didn't have the settlement influence for bullishness there. Same thing with 2014 and 2015. We saw the market rally going into the July time period. And in the
63 00:10:57,750 --> 00:11:10,020 2016 time period, the bullishness was also not seen as well. And this year, we haven't got to July yet. We can see clearly the wheat market has been in a
64 00:11:10,020 --> 00:11:19,650 strong bearish market. And now by using that seasonal tendency, let's look and see if there's any influences for sell offs from the beginning of the year,
65 00:11:19,650 --> 00:11:28,800 January, going down into June. So we can find the first January and our weekly chart is in January 2013. Follow that line straight up and you can see there was
66 00:11:28,800 --> 00:11:46,020 a tie formed around the $8 a bushel and price traded lower. As a result down into Yes, the July time period. And in 2014, we actually seen the price only
67 00:11:46,020 --> 00:11:59,640 decline for about a month in January 2014, then it rallied. Then the following year in January 2015, we seen price decline a little bit and trade it down into
68 00:11:59,640 --> 00:12:13,320 what looks like May and in May created a low and started the rally. In 2016, we saw the market decline. And while they have a retracement above the $5 mark, I
69 00:12:13,320 --> 00:12:24,870 did tray down into a low of the July August time period. And in January 2017, we did not see a decline we actually saw that rally. So there's times when the
70 00:12:24,870 --> 00:12:36,720 seasonal tendency will not be of any significance at all won't have any impact on price. But if we ever see the wheat market go into a bull market. The best
71 00:12:36,720 --> 00:12:47,490 times to be a buyer that I've seen historical price action and you can see it for yourself is to look for a low in the July August time period. And then in
72 00:12:47,490 --> 00:12:58,590 November, so November and July, August, they're the best time to be a buyer of wheat markets are in bear markets. Like we've seen in the wheat market here. If
73 00:12:58,590 --> 00:13:12,660 we is in a bearish market, best time to look for sells is beginning of the year going down into summer months. Chicago Board of Trade corn Okay, so the best
74 00:13:12,660 --> 00:13:23,310 time to be looking for shorts, obviously you can see it jump off as a seasonal tendency chart here in May, May in June create seasonal tendencies for corn
75 00:13:23,310 --> 00:13:32,430 historically over the last 40 years. And it usually drops down into September October time period of the year where it makes a seasonal low. So we can check
76 00:13:32,430 --> 00:13:42,600 check this by looking at the April time on our weekly chart and find in April and see if it declines down into September October. So the first one we can see
77 00:13:42,630 --> 00:14:01,260 in 2013. It creates a little bit of a retracement that falls out of bed in July down into the October time period. Then in April of 2014 it creates the very
78 00:14:01,260 --> 00:14:13,740 high of that particular year trades down into October, September October creates the low. Then in the following 2015 year, we can see that April has a decline.
79 00:14:14,670 --> 00:14:28,650 It does rally a little bit early in 2015 creates a high and sells off again but can't get below that 350. And actually 350 stays the support level for a number
80 00:14:28,650 --> 00:14:38,790 of months going into 2016. So we don't see any decline. In April we actually see it rally. And that's actually strong because what we're seeing is is the
81 00:14:38,790 --> 00:14:50,130 seasonal, seasonal tendency for corn actually be declining in the spring. It can't it's finding support off of a historical $3.50 A bushel price mark and it
82 00:14:50,130 --> 00:14:54,450 rallies up in challenges and old highs seen in July of 2015.
83 00:14:56,100 --> 00:15:07,590 Then price creates a low in the September time period when we expect a low. And that's been seen in 2016. And corn has been steadily moving sideways to slightly
84 00:15:07,590 --> 00:15:16,290 higher since that price point. And we didn't see any decline. Notice that in April, May of this year, we've actually seen corn go higher. Today, I think we
85 00:15:16,290 --> 00:15:25,080 have a little bit of a sleeper market, meaning that we might see some bullishness for the corn market. Because it's not abiding by its seasonal
86 00:15:25,080 --> 00:15:37,440 tendency. So if it's not doing that, was it telling us underlying relative strength? Okay, the next one is feeder cattle, eat hamburgers. This is where it
87 00:15:37,440 --> 00:15:46,950 comes from. If you're wondering what a feeder cattle is, right, so if we look at the seasonal tendency for this commodity, it usually makes it seasonal low in
88 00:15:46,950 --> 00:15:57,660 the April May time period, it can occur as early as February, if you look at the dashed red line, in last 15 years, there has been an impulse to create a
89 00:15:57,660 --> 00:16:06,540 seasonal oil as early as February. But generally, the best moves, as you can see in the dashed line really starts to move higher at the end of April going into
90 00:16:06,540 --> 00:16:15,960 May, and create some seasonal high in around August and September. And it goes in consolidation. So how do we use this information, it's ideally a good time to
91 00:16:15,960 --> 00:16:26,280 be a buyer in the spring and sell it going into the fall. So we can find April, and look for basically October so between April and October there should be a
92 00:16:26,280 --> 00:16:38,310 rally. So if we look at the April delineation for 2013, we can see the market rallied in fact from that springtime period all the way up into the October high
93 00:16:39,000 --> 00:16:50,640 of 2013 nails the short term high and consolidates just like the seasonal tendency does. Then in 2014, we see the rally going all the way up into the very
94 00:16:50,640 --> 00:17:02,640 high of the feeder cattle market in October 2014. Then in April 2015, we see price rally again, but it falls out of bed a little early. So in August of that
95 00:17:02,640 --> 00:17:11,640 month, or that year, we can see that it had already started to decline, but we still saw an impulse of price to move higher in the feeder cattle market after a
96 00:17:11,640 --> 00:17:23,640 long term breakdown in market structure. And in 2016, we see price actually not see the seasonal tendency have any impact whatsoever, because of the overall
97 00:17:23,640 --> 00:17:35,280 bearishness on feeder cattle. Then in this year 2017, we can see that April created a nice little short term low at the dollar 30. And then it rallied. And
98 00:17:35,280 --> 00:17:46,110 we've since rally up to 160, which is a phenomenal price move for feeder cattle. And we still may even go higher. But looking at what's already happened this
99 00:17:46,110 --> 00:18:06,180 year, it's been a nice rally from the 130 level up to 160 every 100 basis points or one full point or handle is $500 per contract for feeder cattle. Okay, the
100 00:18:06,180 --> 00:18:16,800 next one is live cattle. This is what you get before you get an hamburger. These are the living breathing cows. So the seasonal tendency for this commodity is a
101 00:18:16,830 --> 00:18:30,240 high forming in the February March time period and a seasonal low forming in June. So ideally, the stronger impulse is to see a low form in June. So there's
102 00:18:30,240 --> 00:18:40,260 usually a markup period seen in the middle of the year going into the end of the year. So it's real easy to use that information by looking for July essentially
103 00:18:40,260 --> 00:18:52,500 on the weekly chart. Find July and see if that creates a low up into the January time period so that we can see the weekly chart. So find that July in 2012. And
104 00:18:52,500 --> 00:19:03,300 look at the January 2013. You can see it did in fact rally that between these two price points. Then in 2013, we can see that it did rally as well in June of
105 00:19:03,300 --> 00:19:22,830 that year, all the way up into the end of 2013 going into 2014 then again in 2014 June, it creates the low of the year. And then it rallies incredibly going
106 00:19:22,830 --> 00:19:31,440 up in creating the high of the year in what looks like November and then following year.
107 00:19:32,640 --> 00:19:41,220 We had the market in a bear market in in influenced by seasons and it didn't didn't have any impact at all during the June July time period. But the sell off
108 00:19:41,250 --> 00:19:51,870 in February March starting in 2015. You can see that they actually called really nice shorts and tops in the marketplace and as the market was bearish. The
109 00:19:51,870 --> 00:20:03,720 January February March time period each year was creating the really nice sell offs as the market was bearish. And then we created Nice low in 2016 in the
110 00:20:04,260 --> 00:20:13,980 October time period, which doesn't fit anything seasonally, but we started to trade higher. And now this year, we saw the market have a little bit of a
111 00:20:13,980 --> 00:20:28,260 decline in the February, March going into April. But then April, May in June, we're seeing the effects of that seasonal tendency here, with higher prices on
112 00:20:28,260 --> 00:20:42,240 cattle. So, again, really strong seasonal tendency here. If you can blend it with technicals, it's a really strong one. Next one is lean hogs, okay, if you
113 00:20:42,240 --> 00:20:50,640 like you're making cheeseburgers, this is where you're making comes from, used to do pork bellies, but they don't trade theirs anymore. Alright, so we're
114 00:20:50,640 --> 00:20:59,130 looking at the seasonal tendency for this one, in my opinion. And please take this with a grain of salt. If you're looking for a seasonal tendency, that is
115 00:20:59,160 --> 00:21:11,550 one other dandy is like, this is the closest thing to perfection in terms of my ability to, you know, find and study things over historical data. This one here
116 00:21:11,580 --> 00:21:26,880 is a super one. This one is a buy in March, April, and in high forming in May June, down into a seasonal low of September, and October. Okay, so, primarily,
117 00:21:26,940 --> 00:21:35,010 if you're gonna be a buyer of lean hogs, we're gonna be looking forward by around the February March time period. Basically, we look for April on our
118 00:21:35,010 --> 00:21:46,140 weekly chart and just go to the Letho at one line. And you should see a seasonal low at that time period. So we're going to look at 2013 April, the one vertical
119 00:21:46,140 --> 00:21:56,310 line to the left of the April delineation, and that's going to be March. And you can see that it nails the 2013 low and it rallies all the way up into July,
120 00:21:56,640 --> 00:22:07,020 creates the seasonal tendency to high and falls out of bed. The next year. You can see in 2014, we get a phenomenal opportunity to see February March time
121 00:22:07,020 --> 00:22:15,870 period season fancy rally, it goes vertical, it goes insanely high way high. That is a millionaire maker that right there is a megatrade that's what it looks
122 00:22:15,870 --> 00:22:25,200 like. When you see types of moves like that. It's It's hard not to be pleased with a move like that. It's incredible. And the season fancy high forming in
123 00:22:25,200 --> 00:22:38,190 July. Well, look what happened in 2014 it nailed the high then in the 2015 time period, you can see the seasonal tendency as well occurs in March. It rallies up
124 00:22:38,190 --> 00:22:48,270 into the June July time period creates the seasonal tendency high in falls out of bed the following year. Again, we see the March April time period creates the
125 00:22:48,270 --> 00:23:04,170 seasonal low. It rallies up into June July and creates the high sells off goes down into September, October. And this year, we saw again, the March April time
126 00:23:04,170 --> 00:23:14,880 period sees a tendency for Lean hogs to rally. And it has done so in stunning fashion. So this one here is one of those best kept secrets traders that trade
127 00:23:14,880 --> 00:23:23,550 commodities, they probably never see this, but I can tell you, everyone that trades commodities professionally, any trade agricultural, they trade this one
128 00:23:23,730 --> 00:23:24,390 every year
129 00:23:29,760 --> 00:23:39,600 alright season tenancies for Cocoa. Alright, you like your cocoa, hot chocolate, you like your candies, well as where we're getting it from cocoa. So the
130 00:23:39,600 --> 00:23:50,580 seasonal tendency for this one here, while it's muddy a little bit, if you look at it, the best ones I see are a low to form May June, up into the September
131 00:23:50,580 --> 00:24:00,720 October time period. So we're looking for a seasonal high to form basically the last week of August going in September and making a seasonal low last week of
132 00:24:00,720 --> 00:24:09,060 May going in first week of June. So we can find July in our chart and go over one to the left one broken line to the left, and there should be a seasonal low
133 00:24:09,060 --> 00:24:23,160 forming, trading up into October time period. So let's test that out on the 2013. Year. So we're gonna look for the July of 2000 mile Starlin on 2012.
134 00:24:23,160 --> 00:24:37,290 Michael, you can see that there was a certainly a rally that traded up into the September time period in 2012. And we see it occur in 2013. We see it occur in
135 00:24:37,320 --> 00:24:52,950 2014. You see it occur in 2015. Is a rally that we actually did a study on last year. If you were following me as part of a live session I was doing on YouTube.
136 00:24:53,610 --> 00:25:06,030 We did a case study on the cocoa market as a by trading up to that 32 132 50 level, which ended up becoming a pretty neat case study, we use some options in
137 00:25:06,030 --> 00:25:16,500 there. And even though it didn't trade long term a lot longer higher price move, it did go to what we were looking for. And we saw doubles and triples on our
138 00:25:16,500 --> 00:25:30,240 options is as a as a paper trade. And in 2017, we're entering obviously the same type of thing here we see cocoa rallying from the 1800 level, up almost to the
139 00:25:30,240 --> 00:25:43,170 2100 level. So we've saw that same influence as well with a seasonal tendency. Okay, this one here, orange juice, this one has, has a strong tendency for
140 00:25:43,170 --> 00:25:52,050 September October low the form and then rally. So basically, the easiest thing to do is find in October, and see if it creates a low and see if it rallies into
141 00:25:52,050 --> 00:26:06,210 December, or basically one vertical line to the January mark to the left. Okay, so you can see that that rally did occur in 2012. It did occur in 2013. It did
142 00:26:06,210 --> 00:26:25,320 occur in one, one month late and 2014. Nailed it on 2015 Nailed it in 2016 and we'll have to see if it's going to do it this year. Take coffee, I liked this
143 00:26:25,320 --> 00:26:36,300 coffee market when I was a more active commodity trader. I don't trade commodities anymore. But when I was I was always falling coffee. And this pair
144 00:26:36,300 --> 00:26:47,190 when it moves it can move a lot. And it's best time to be a buy is June July. You can see that the last 15 years there's been a seasonal tendency for to
145 00:26:47,190 --> 00:26:59,820 create a low and mid June but seasonally over historical long period of time for years. It's usually the month of July. And if we go and look at every July you
146 00:26:59,820 --> 00:27:14,100 can see that it does create a low in 2012. doesn't create so much of one and 2013 does nail won beautifully in the 2014 year in July and doesn't do so much
147 00:27:14,100 --> 00:27:25,860 of a job of it in 2015 does a wonderful job in 2016. And I'm almost certain we'll probably see one of those occur this year. So we'll be watching the coffee
148 00:27:25,860 --> 00:27:39,600 market going into the next month of 2017 for bearishness. The ideal scenario is to look for April May hi and we can see by looking at time with some of the
149 00:27:39,600 --> 00:27:51,900 market was bearish. April creates a April May time period in 2013. As a nice sell off there. It creates a high in 2014 sells off rather nicely there and in
150 00:27:51,900 --> 00:28:01,530 2015 when it was bearish. The April May time period created a nice sell off took a little bit time lethargically went down from time to time of the year. We had
151 00:28:01,530 --> 00:28:13,200 a small little retracement lower in 2016 Nothing Nothing real significance but this year, we have seen the April May time period create bearishness for the
152 00:28:13,200 --> 00:28:24,900 coffee market. And we're seeing that here in price action. Okay, seasonal tendency. Next, that ends our discussion for the agricultural is cotton.
153 00:28:26,580 --> 00:28:37,290 Very strong wanted to sell off in the May time period. So we can look for the April portion of our weekly chart and see if there's any sell offs for April.
154 00:28:38,040 --> 00:28:51,750 And you can see in 2013 Really nice sell off for the 94 cents a pound. In cotton, it trades down to 80 cents, 14 cents, each one for handle is $500 for
155 00:28:51,750 --> 00:29:10,860 this commodity. And the next one we have in 2014 creates the height of the year and sells off rather precipitously. Many, many many handles lower. And in 2015,
156 00:29:10,860 --> 00:29:19,260 we had some consolidation as you would probably expect after a big move like that we saw in 2014 was in consolidation, but yet it still had a little bit of a
157 00:29:19,260 --> 00:29:36,510 sell off where it moved about 400 basis points or $2,000. Then in 2016, we did not see so much of a high sell off in April and we ended up seeing the low form
158 00:29:36,540 --> 00:29:47,130 and it started rallying so that actually shown how the bearishness that would be expected in the seasonal tendency for cotton in April, May we start rallying and
159 00:29:47,160 --> 00:29:56,640 that's going to be an opposing force showing you that if it's not following the normal business routine of selling off in the spring, it's showing you there has
160 00:29:56,640 --> 00:30:08,370 been a strong underlying strength behind this commodity. And you can see, it's been straight up since then. And in the following year, we're now time of year
161 00:30:08,370 --> 00:30:18,060 this recording is 2017. We did not see a sell off again either. Many importantly, we only saw like 300 basis points sell off from 70 to 74. But it
162 00:30:18,060 --> 00:30:24,810 rallied precipitously going into the 87 cents a pound.
163 00:30:31,500 --> 00:30:38,640 Okay, first in our discussion with Financials, we're looking at crude oil, strong tendency in the beginning of the year the rally and creating seasonal
164 00:30:38,640 --> 00:30:50,130 tendency high in September October time period. So we can look in January 2013, we can see that it did in fact, in this case, sell off a little bit didn't have
165 00:30:50,130 --> 00:31:03,480 the seasonal tendency there. But we did see a decline in the September October time period of that year, creates the high. And then we have in January 2014,
166 00:31:03,510 --> 00:31:16,320 the crude oil market data fact rally traded up into the month of June of that year in 2014, creating high then it sold off rather aggressively. And we see in
167 00:31:16,320 --> 00:31:29,790 the following year 2015 We see a sentence seasonal tendency for it to rally and it does it does so for about 1500 basis points. And then we see price in 2015.
168 00:31:29,790 --> 00:31:38,550 We see September October, seasonal tendency create a high around that $15 A barrel mark and trades down into the seasonal oil that would be expected see
169 00:31:38,850 --> 00:31:48,780 January of 2016. And price rallies all the way up into what we saw for a seasonal tendency outline to the left, perfectly delivered. And then we saw
170 00:31:48,780 --> 00:31:57,690 price consolidating it'd be in 2017 and then slowly dropping lower. So there's been no seasonal tendency support for bullishness in the first half of this
171 00:31:57,690 --> 00:32:06,510 year, price has been going lower. So was it telling you there's a lot of supply when the oil market so we're going to probably see oil trade lower because
172 00:32:06,510 --> 00:32:20,550 there's been no significance on the upside when they're seasonally should be. Okay, the next one is the high grade copper market. And again, this is kind of
173 00:32:20,550 --> 00:32:32,940 like wheat, it's kind of iffy. Best time to be buying copper are the months of June in the month of November. That scenario for selling is September and April.
174 00:32:33,240 --> 00:32:49,680 Okay, so we're gonna look for April to create a high, you can see that April sold off in 2013. It's sold off in 2015. And we had a sell off in 2016. And we
175 00:32:49,680 --> 00:33:00,450 had a little bit of a sell off this year. For the long side. Let's find the July time period and see if to the left of it for June creates a low in 2012 we see
176 00:33:00,450 --> 00:33:12,540 happening there seasonal tendency long, seasonal tendency long for 2013. In June, that came to fruition 2014 We had a little bit of a long also in copper.
177 00:33:13,440 --> 00:33:27,420 And in 2015 We did not have the seasonal low formation of a seasonal tendency by that would be normally expected in June July 2015 didn't have it did have a sell
178 00:33:27,420 --> 00:33:41,160 off in that month at year September. So we had a seasonal tendency for bearishness to come into effect. And in April of 2016, that a little bit of a
179 00:33:41,160 --> 00:33:52,680 sell off at this, it consolidated and we've stayed in a range for the entire basically the majority of 2016. And finally, it rallied in the November time
180 00:33:52,680 --> 00:34:05,790 period, October November time period of 2016. And then in April of this year, we saw that seasonal tendency so far declined a little bit as well. So when copper
181 00:34:05,790 --> 00:34:15,870 goes into a premium, which we'll learn about in the next lesson, this is one of those metals that can do extremely, extremely well. And if it's bullish and a
182 00:34:15,870 --> 00:34:27,360 seasonal tendency says that June and November is a good time to be a buyer well as a premium. This market can really really move gold
183 00:34:28,650 --> 00:34:40,740 this one's a really simple one. It's a buyers market. So we look for the July August low the form and that's it we don't look for anything else. You can look
184 00:34:40,740 --> 00:34:50,940 for a sell off in January February if you really want to be hard pressed for a short but generally the ideal scenario is to look for Long's and the reason why
185 00:34:51,060 --> 00:34:59,880 all the jewelry that gets sold it in your Christmas time and New Year's and all that business. It has to be obviously mined. It has to be stored it has to be
186 00:34:59,880 --> 00:35:07,710 put processed, it has to be turned into the jewelry and then put to market early enough so that way everyone can buy it, wrap it up, put it on Easter tree, but
187 00:35:07,710 --> 00:35:17,400 in the year for Christmas, so the seasonal tendency for gold is just that. So we're going to look for July to create the lows. So if we go into July 2012, lo
188 00:35:17,400 --> 00:35:31,560 and behold, we have a rally in gold. And we see a rally in 2013 and July, we see a high form in 2014. There's a rally that forms in 2015. And July, there's a
189 00:35:31,560 --> 00:35:46,080 rally that occurs in June July of 2016 ends up making a high. And then well we don't have July yet, July or the next month. So we'll see if we get that rally
190 00:35:46,140 --> 00:36:03,360 occur in gold. Okay, lastly, in our series of seasonal tendencies is the silver market. Much like gold, we're looking for July August time period for a low and
191 00:36:03,360 --> 00:36:12,540 silver can make a selling point in February. But we're focusing primarily on being a buyer of silver. Because if this market does go into a parabolic bull
192 00:36:12,540 --> 00:36:20,730 market, which it tends to do that every 10 or 12 years, if you look at what we've been seeing here for long term, silver looks like it's poised to make a
193 00:36:20,730 --> 00:36:30,750 nice run and it could go up to the 20, sevens, maybe even 28. And you'll see why I was bullish in the time we've been spending together in this mentorship, why I
194 00:36:30,750 --> 00:36:38,460 believe this metal could have some real legs with it and go higher, doesn't mean it can't go higher than 28th, it gets on a rip. But that's where I think it's
195 00:36:38,460 --> 00:36:58,470 going to go over the next 18 months or so. So if we see the seasonal tendency for silver to occur in the July August time period, we can anticipate the July
196 00:36:58,530 --> 00:37:13,020 low to form. So we'll find all the July and see if there's a low forming 2012, the low in July 2013 below in July. And there's a high forming in 2014. And
197 00:37:13,020 --> 00:37:27,120 there's a small little consolidation. In 2015 2016. We had price rally up and then create a high in July. And we are getting ready to have July this year for
198 00:37:27,120 --> 00:37:32,670 2017. So we'll see if we have that bullishness of an impulse to send silver higher.
199 00:37:34,860 --> 00:37:45,690 That concludes the discussion for the seasonal tendencies because I've already mentioned the commodities for kondiles. In our discussion earlier in his mentor
200 00:37:45,690 --> 00:37:54,000 sheet when I discussed all seasonal tendencies for currencies and how they relate to Forex. I'm not going to use the bond market or debt instruments either
201 00:37:54,000 --> 00:38:03,240 because I use those also in the discussion for seasonal tendencies. So these are the markets I like there's other commodities that you can trade, obviously, you
202 00:38:03,240 --> 00:38:13,590 can trade canola, you can trade rice, you can trade butter, and trade milk futures. You can trade, palladium and platinum. You can trade natural gas. So
203 00:38:13,590 --> 00:38:24,060 there's other futures, contracts that you can trade and obviously the index but which we'll talk about next week in our teachings for June 2017 content. But for
204 00:38:24,060 --> 00:38:32,040 commodities, these are the ones I like to highlight. These are the ones I had historically, in my basket, like to look at, there were some quirky little
205 00:38:32,040 --> 00:38:41,190 things that I did with the thinner markets like canola and rice, where I would usually open interest to client on that to frame whether or not the grain
206 00:38:41,190 --> 00:38:50,490 complex was bullish, or bearish. And back in the early 90s, I felt that there was validity to that and actually used it in my teaching material. Then, over
207 00:38:50,490 --> 00:38:57,870 the years, I've learned that that wasn't entirely true, it just means at the time, all the grains were going up because all commodities were going up. So it
208 00:38:57,870 --> 00:39:08,070 was a drought across the board in the 90s. And it just caused all kinds of problems for all the grains. So that's why they all went up in any open interest
209 00:39:08,070 --> 00:39:18,750 declined. You know, I was erroneously attributing the open interest decline in canola and rice as supporting roles to why wheat and soybeans and corn should go
210 00:39:18,750 --> 00:39:27,840 higher. And that's not true. I used the same thing with oats. We look at oats and I would look for the open interest decline there and that would support
211 00:39:27,840 --> 00:39:36,300 bullishness for the grain complex. And I can tell you I was very, very wrong by teaching that stuff back then I didn't know what I was doing. And now because
212 00:39:36,300 --> 00:39:44,610 I've been looking at this stuff for over two decades, I know that open interest is directly related to only that particular market. After all, it's the open
213 00:39:44,610 --> 00:39:55,380 interest of that commodity, not something that can be shared an ideal of so I've learned over the years a lot about how these markets work and operate and when I
214 00:39:55,380 --> 00:40:07,590 was one America Online, I thought I had everything figured out as a The early neophyte. But I didn't have much of an understanding I actually, but in my
215 00:40:07,590 --> 00:40:16,140 opinion, the seasonal tendencies have held up very, very well over the last 20 plus years. I'm going to counsel you to come to your conclusion whether or not
216 00:40:16,140 --> 00:40:24,450 there's any validity term, the best way I can tell you to use them is use everything else we've done so far, and mentorship, blend these things together.
217 00:40:24,900 --> 00:40:33,030 If we know that there's a seasonal impact for prices to move higher for a particular commodity, and you know which ones they are every year when you get a
218 00:40:33,030 --> 00:40:40,800 calendar, okay, or you can just program it in your in your phone, if you have a smartphone, just put in your smartphone, at the beginning of every month, make a
219 00:40:40,800 --> 00:40:47,700 list of all the seasonal tendency influences that you should be expecting for that particular month. That way every month when you sit down your charts, and
220 00:40:47,700 --> 00:40:55,590 say, Okay, well, seasonally, this is a good time for this particular market to go higher or this particular market go lower, and then go into your analysis and
221 00:40:55,590 --> 00:41:05,400 see no force it but look and see if there's reasons to justify that seasonal tendency. Here's the wonderful takeaway. If it's not for, you know, basically
222 00:41:05,400 --> 00:41:13,530 following the seasonal tendency, it's telling you something, either it's going into a long term consolidation, which you can't make money with. Or if it's not
223 00:41:13,530 --> 00:41:21,720 consolidating, if it's going the opposite direction. That means it's very significant strength, if the seasonal tendencies calling for lower prices, and
224 00:41:21,720 --> 00:41:30,180 it's not doing that it's going higher, it's actually telling you something, there's a strong demand for that commodity. Check and see if it has net long
225 00:41:30,180 --> 00:41:36,570 positions in the commercials. As we discussed so far, in the beginning of this month, I gave you ways to look at the hedging program, wait for them to go into
226 00:41:36,570 --> 00:41:45,270 our hedging buy program and go in and test your discount arrays and see if you can get any movement off of that. So hopefully, you've learned something from
227 00:41:45,270 --> 00:41:54,000 this teaching. I can't tell you how richly these graphs have blessed my understanding of the marketplace over the last two decades. And I'm sure if you
228 00:41:54,000 --> 00:42:01,830 study them and hold them close to your heart like I did, they'll serve you equally well, if not better. Until next lesson. I wish you good luck and good
229 00:42:01,830 --> 00:42:02,310 trading