Data &
Technology
Research
Reports
Report Solutions
Reports Library
Actionable
Strategies
Free
Resources
Simple Backtest Calculator
Simple Seasonality Calculator
The Kelly Criterion Calculator
Sentiment Geo Map
Public Research Reports
Free Webinar
Pricing
Company
About
Meet Our Team
In the News
Testimonials
Client Success Stories
Contact
Log inLoginSign up
< BACK TO ALL REPORTS

Seasonal Commodity Trends to Pay Attention To

Jay Kaeppel
2021-10-04
Seasonal trends are best used as "weight of the evidence" indicators - to help confirm or deny your overall analysis. In this piece, we highlight the latest significant seasonal tendencies in Energies, Metals, and Currencies.

Seasonal trends are NOT predictions or forecasts. They merely show when a given tradable has tended to trend in a particular direction in the past. 

In using seasonal trends myself, I focus on the major trends rather than on every little squiggle in the Annual Seasonal Trend chart for a given security or commodity.

Basic Rules for Using Seasonal Trends:

  • NEVER assume a given seasonal trend will play out as expected "this time"
  • Use ST as a "weight of the evidence" factor, NOT as a standalone indicator
  • IF you are bullish AND ST is bullish (or if you are bearish and ST is bearish), it is a time to aggressively press your advantage (while still respecting your own position sizing and risk management rules)
  • IF you are bullish AND ST is bearish (or if you are bearish and ST is bullish), you can still enter a bullish trade, BUT be more mindful of risk (i.e., perhaps commit less capital and/or use a tighter stop)

I am watching a number of these right now, including energies, metals, and currencies.

ENERGIES

As I discussed here and here, the energy sector is at an important juncture. To wit:

  • According to seasonal trends, crude oil, heating oil, and unleaded has SHOULD be expected to decline in the months ahead (while natural gas is still in the middle of a favorable period)
  • Meanwhile, in real-time, the energy products are soaring and breaking out to new highs
  • IF these energy products DO NOT reverse during the seasonally unfavorable period - and they all recently broke out to new highs - it may signal that we are in a true inflationary spiral

Let's talk real-world trading:

  • IF you are playing the long side, there is no reason not to let your profits run, BUT beware of the potential for a quick reversal - and consider moving trailing stops up to lock in profits
  • IF you are looking to play the short side (i.e., expecting seasonality to assert itself ultimately), be very careful about shorting into a soaring market and consider waiting for some sign of a reversal (remember, sometimes seasonal trends are just plain wrong, and jumping in front of a freight train is fraught with peril)


METALS

Precious metals and copper have been under pressure of late. Precious metals have disappointed many investors who expected them to act as a "hedge" against inflation. No such luck so far in 2021. These markets are oversold, and a bounce is certainly a possibility. However, if the Annual Seasonal Trend plays out, there may be little relief in the near term.

Also, note that as I detailed here, the stocks of gold miners are in the middle of a particularly weak seasonal period (which - again - DOES NOT mean that that cannot rally, it only means that they typically show above-average weakness, which traders should be aware of).

CURRENCIES

Many traders are surprised to learn that foreign currencies also have a seasonal element to their price movements. At the moment, several currencies are entering periods of seasonal weakness. It should be noted that during this time of year:

  • When they go up, they tend to go up a little
  • But when they go down, they tend to go down a lot


DATA &
TECHnologies
IndicatorEdge
‍
BackTestEdge
‍
Other Tools
‍
DataEdge API
RESEARCH
reports
Research Solution
‍
Reports Library
‍
actionable
Strategies
Trading Strategies
‍
Smart Stock Scanner
‍
FREE
RESOUrCES
Simple Backtest
Calculator
Simple Seasonality
Calculator
The Kelly Criterion
Calculator
Sentiment Geo Map
‍
Public Research Reports
‍
Free Webinar
COMPANY
‍
About
‍
Meet our Team
‍
In the News
‍
Testimonials
‍
Client Success Stories
Pricing
Bundle pricing
‍
Announcements
‍
FAQ
© 2024 Sundial Capital Research Inc. All rights reserved.
Setsail Marketing
TermsPrivacyAffiliate Program
Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Testimonial Disclosure: Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.