Review: The Seasons of the Markets
I’m Reviving This Article from the Archives as we need to
Stay Conscious of this Principle.
NOTE: Though this was written over 4-years ago, the Principles it was based on are still holding and the Seasons mentioned are still in effect. – George
The ‘Seasons’ of the Markets
Nature’s Analogies: A Master Tool for Market Positioning
An Analogy is something ‘like’ something else in it’s behavior or nature and, was the basis of WD Gann’s work as it was a most useful way of understanding the World and the actions of things within it.
WD Gann worked from the Principles of Natural Law and, this system of thought took basic Principles and showed how they reflect throughout every level of existence at both the macrocosm and the microcosm levels.
The Ancients observed it and understood it’s applications. As Natural Law was purposely removed from the educational system of today, we’ve lost connection with this valuable knowledge and it’s uses with all things of this World. And, this includes the Markets. The Sages of old summed this Great Law into this short phrase . . .
“As Above, so Below”.
Man, despite his ‘intellect’, is not immune from working within the matrix and laws of Nature and those experiences which we all share can teach us great insights even into something so mundane as the markets and their price movements.
WD Gann depended on the reliability of it and, it never let him down. He wrote that one should always note where a market was in it’s ‘cycle’. Much like knowing whether one was in Summer or Winter would affect how we dressed and conducted our affairs. We know this instinctively now because we’ve come to learn (through experience) that each season of the year has it’s own characteristics and qualities.
The same would hold for Markets and their price behavior.
For instance, when the analogy of the Seasons are applied to markets, we can discover WHERE we are within the ‘Seasons’ of a Market.
When we know WHAT SEASON we’re in within a market’s cycle, we’ll know immediately what the next season coming will be and may take precautions and use our technical tools to watch for early indications that our present season has ended and the new one has begun.
For example, in the GOLD market many have ignored the seasons of the Gold market and substituted hope instead of reason (due in large measure to the constant promotion to buy gold by media and internet sources).
However, Summer doesn’t last forever and we must individually awake to the reality of the Season we’re in.
Much as with those who still speak of global warming while heading towards the coldest winter conditions over the next decades, Passion has overruled the cold facts (sorry).
There’s no difference in the argument, and, in both cases, there were plenty of early clues to the shift in trend (weakest sunspot cycle in 190-years and declining (instead of climbing) global temperatures: see chart).
And, just as there was a warning of the turn in trend for Gold after it hit it’s Highs in 2011 and then broke it’s upwards momentum to a sideways trend.
No one knows why these trends change, but, then, one doesn’t really have to know.
Just following the trend and the ‘Seasons’ of the markets or the Global Climate (while keeping an open mind), will, at least, keep us on the correct side of reality versus the fiction of the moment in mainstream ‘news’.
In both cases, there are Grand Seasonal Cycles at work which have changed (while those following them have not noticed because they’ve been trapped by their own egos into holding a single, unwavering opinion no longer based in fact.
Realities are not issues of ‘political correctness’ or subject to social acceptance and the Laws of Nature can’t be voted into or out of existence.
We may not like the Reality. But, that doesn’t change it or it’s effects upon us if we ignore it or, worse, try to fight it.
I’ve included another ‘Seasonal’ chart for your consideration. This one is for the S&P 500 Stock Index. There are several complete ‘Seasonal’ cycles that have taken place over the course of the time period covered on this chart (back to the 1970’s). The market’s most recent actions have taken us from ‘Spring’ back in 2009 and on into ‘Summer’ which we’re still enjoying.
Of course, no one basks in the sunshine of Summer forever.
The turning of the Seasons WILL come. There’s nothing to fear in that. Just preparations to take and signs to anticipate to know when the change has come. Most fear the markets at these levels and that fear creates hesitation leading to lost opportunities. However, if we can learn to work with the natural seasons of the markets, we’ll find our path far easier and the favorable trend will sweep us along with it like a kite in a gentle breeze.
As much as we’re able, we need to set aside the distractions of ‘outside’ influences and opinions and make our own sovereign judgments and take actions based on broad knowledge and critical understanding. All responsibility is ultimately our own as are the rewards. This is the epitome of mature and responsible investing and a balanced Life. – George