V.9:11 (458-460): The Seasonal Cycle by Hans Hannula, Ph.D.

The Seasonal Cycle by Hans Hannula, Ph.D.

I use natural cycles to help me trade stocks and commodities profitably. One of the most obvious and powerful of nature's cycles is the cycle of the seasons. Its effect is obvious not only in commodities, but in stocks and bonds as well. Economists widely accept seasonal variations. Traders have long recognized seasonal variations as valuable timing aids. The seasonal cycle, in fact, is the basis of W.D. Gann's 45- and 90-day cycles.

There are three important steps for a trader to take in applying natural cycles to his or her trading. First, a trader must know when the cycles begin. Second, he or she must understand how natural cycles show up in a stock or commodity. Third, the trader must use the cycle timing information in concert with other technical analysis techniques to decide how likely it is a particular stock or commodity will make a major turn on the cycle turning point. Let's illustrate this approach with the seasonal cycle. Any grade-school pupil can tell you when the seasons begin. In the northern hemisphere, generally, spring begins March 21, while summer begins June 21. Autumn begins September 23, and winter begins December 21. Actual dates may vary by one day in a particular year. So step one is simple.