If you Still Think Seasonality Doesn’t Exit - By Jake Bernstein

If you have been a subscriber to one of my services, a seminar or webinar attendee, or a mentoring student then you know that one of the 5 major market tools I use is seasonality. I have been researching, using, teaching and writing about seasonals since the early 1970’s. I believe that I have the most through and well researched seasonal information in the stock and commodity markets. In spite of the fact that seasonals as I use them are 100% objective, clear, specific and well researched. Despite all of the above there are still traders out there who have no idea that seasonality exists. Furthermore, some of the regulatory agencies in futures have, for many years, been on record as claiming that seasonal factors are taken into consideration before the fact and that their effect is therefore minimized because “everyone” knows them. When I consider such points of view I have to sit back and restrain my desire to scream. Why? For one thing, the claim that “everyone knows” about seasonals is utter nonsense and just plain untrue.

The fact that many people know something doesn’t mean they know how to implement it or that they will do it correctly. But more importantly there are literally hundreds of seasonals that have been highly accurate for many years despite the fact that they have been known by many traders.

The Gold Seasonal
For a number of weeks I have been telling you about the coming seasonal in gold futures. I advised you that the period of time from 15 September through 25 September has historically been one during which gold prices tend to rise and often sharply. I published the seasonal chart on the front page of this newsletter. I wrote about it in my COT Weekly newsletter. I talked about it on my weekly Commodity TV interview. I wrote about it and talked about it on my weekly Yorba.tv interview. I talked about it on my weekly WallSt.net interview. I taught the seasonal trade to my
mentoring students. We all knew in clear and objective terms ahead of time that the tendency was not 100% correct but we knew the risks and the odds and the pattern. We knew our exit strategy both from the stop loss standpoint and the profitable outcome. Admittedly we did not know the extent to which the market would move. We did not know that gold would have its largest one day percentage gain in history but we DID KNOW that during this time of the year there have been crises in the past that pushed gold sharply higher.

Denial and Reality
There are still those who deny the existence of the holocaust. There are those who deny the existence of racism in America. There are those who do not believe that man has walked on the moon. And in spite of the fact that gold has made history during the time frame of high probability rallies will fail to convince most traders. But to those who do not believe that seasonality is a major force in the markets and those who still do not believe that seasonality is one of the most powerful tools we have in our bag of tricks I offer my condolences. Trading is a very difficult game to win. Solid and effective trading tools are few and far between. The Internet and the popular trading magazines are loaded with false claims, specious advertising and questionable methods. When we find some that actually work we need to embrace them no matter how strongly the concept may run against our grain, our philosophy of life or our academic training. If I had clear-cut proof that the Kabala or prayer worked as trading methods I’d be using them as
well. As traders we need to accept reality and avoid denial. Denial will kill you.