ABOUT SEASONALITY

 The Significant Impact of Seasonal Market Patterns

Although the stock market has produced consistent seasonal patterns for over half a century, the significant impact of seasonal price trends has been either grossly underestimated or completely ignored by the majority of market analysts and investors.

Seasonality investing takes past market history and generates a statistical probability of future performance. Seasonal influences cause biases in the movement of market prices and can give knowing investors a statistical edge. Seasonal market patterns tend to repeat on a weekly, monthly, quarterly or annual basis. A few of the better-known seasonal patterns include:

• The "Pre-holiday Rally," where general optimism tends to push stocks up ahead of holidays;
  
• The "Turn-of-the-Month Effect," where stocks tend to rise at the turn of the month;
  
• "Window Dressing," where fund managers “clean up” their holdings at the end of each calendar quarter;
  
• "Sell in May and Go Away," a phenomenon that shows a consistent annual seasonal market pattern;
  
• The "January Effect," whereby investors tend to return to the equity markets with a vengeance and drive the market up.

Although seasonal market patterns are remarkably consistent, they can change over time. In addition, some calendar trends will disappear or be replaced by others. SAS closely monitors seasonal market patterns and is able to discern patterns on a quarterly, monthly, weekly and even daily basis.

  "Seasonality" is Getting Attention

Seasonal investing is starting to attract a fair amount of attention. And, there is a growing body of research that substantiates seasonal market patterns. Several investment researchers and market historians have produced detailed studies that confirm highly predictable market patterns that have occured consistently over the past 50+ years.

In March 2001, The New York Times reported that the Seasonality Timing System created by Norman G. Fosback for the Institute of Econometric Research “outperformed every other timing model… monitored over two decades.” Times columnist Mark Hulbert lauded the System for its "conservatism;" in other words, its ability to perform with below-average risk.

Numerous market analysts such as W.D. Gann, Art Merrill, Burton Pugh, Samuel Benner and Yale Hirsch have researched and written about seasonality patterns. In addition, seasonality investing has been featured in numerous articles in the financial press, including Barron’s, Bloomberg Personal Finance, Smart Money and The Wall Street Journal.