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Seasonal Price Trends In A Stock

Seasonal Price Trends In A Stock

Market fluctuations fuel the speculation that drives stock markets around the world every day. Both internal successes and failures within a corporation and external events sway the preferences of stock buyers; sending prices either up or down. These minor fluctuations day in and day out can often focus analyst's attention on recent trends and daily or weekly analysis. As a result many analyzes of stocks in the markets or markets themselves on the whole are focused on the short term. This is helpful for your active or pending trades but of little value for your future investment decisions.

The traditional approach to longer term assessment has generally been to turn to more fundamental analysis styles. Traders often review corporate structure, assets and the attempt to assess the general health of a company, the industry and sector it operates within as well as the general market and economic conditions of the country. These evaluations require a great deal of work to complete properly and have no better success rate on average than throwing darts blindly at the stock section of a news paper which has been proved time and time again. The trouble with this sort of analysis is that there are too many factors in play to accurately assess all the possible effects on the future price trend of a stock. It just is not possible to account factor.

One factor in market places around the globe which is predominant at every economic level from micro to macro is seasonal trends. From the fruit peddler on the street to the largest corporations in the world seasonal trends affect business. The traditional market segmentation of the year loosely correlates to the seasons: the first quarter beginning in the winter, the next spring, and then summer and finishing in the fall with the last quarter. Seasonal trends do not only refer to weather systems which for instance may create demand for more heating oil in the winter which then offers to push prices up but it also encompasss social seasonal trends such as school terms, holiday seasons and others. Most traders are familiar for example with the seasonal anecdote regarding the Dow Jones index where purchasing the index every year in September from its inception then selling it every spring would return hundreds of times the investment while buying in the spring and selling in the fall would only multiply the original investment a useful of times.

Repetitive seasonal trends can be found in every type of financial instrument, you will see these trends form in establishments composing particular sectors or those comprised of stocks within a particular market cap. You will also see the trends emerge within particular companies, especially those which rely on a seasonal sales cycle. We were quite surprised when we first built the Quarterageous tool at stockrageous at how similar and clear some price trends were in so many companies. Prior to building the completed version of the tool we tested the concept on a random set of symbols and indices and found enough trend patterns to go ahead with the completion of the development. After we completed the system and tested the trends with much wider samples we were amazed at how often trends were clearly evident. You can test for yourself at the website once you become a member; there is no charge although for a delayed membership.

Repetitions of seasonal trends are not a given for any stock or index however it is not that great of an assumption considering how much seasons affect every structure within our economy. We used the quarterly concept as the period basis in part because so many companies report according to the traditional market quarters and also because those quarters are analogous to the traditional seasons.

You may be surprised at how often you find trends repeating year after year in the same quarter and how these in turn correlate to the seasonal affects on the company. It's free to try and it might just give you a fast and effective means of forecasting both markets markets through the criteria of the market as well as individual stocks.

Source by Dean Schuiteman

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