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Dimitri Speck

D. S.


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Articles by D. S.

Global Stock Markets: Danger Lies Directly Ahead

19 days ago

A Global Pattern
You are no doubt aware of the saying “sell in May and go away”. It is one of the best-known and oldest stock market truisms.

Mark Twain’s famous saying about stock market speculation (the other one was “There are two times in a man’s life when he should not speculate – when he cannot afford it, and when he can”).  From a seasonal perspective he was definitely right about September and October. [PT]

The saying is in fact justified based on statistics. I most recently discussed the subject in the April 24, 2019 issue of Seasonal Insights.  In the eleven largest markets in the world, stocks on average posted a gain of 8.07% in the winter half-year, while the gain achieved in the summer half-year amounted to a mere 0.26%.

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Scientific Long-Term Study Confirms: Seasonality is the Best Investment Strategy!

July 23, 2019

A Pleasant Surprise
You can probably imagine that I am convinced of the merits of seasonality. However, even I was surprised that an investment strategy based on seasonality is apparently leaving numerous far more popular strategies in the dust. And yet, this is exactly what a recent comprehensive scientific study asserts – a study that probably considers a longer time span than most: it examines up to 217 years of market history!

A chart of nominal commodity prices since the mid 12th century. A little aside to this: Estimates for some commodity prices date as far back as 3000 BC. The oldest price records permitting construction of a price index are from the time of the Babylonian empire, the Middle Kingdom of Egypt and the Minoan

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The Strange Behavior of the US Dollar in the Wake of Fed Rate Cuts

July 5, 2019

A Change in Interest Rate Expectations
In the last issue of Seasonal Insights I discussed the typical pattern of stock prices when the Federal Reserve cuts interest rates.  As one would expect, the stock market tends to stabilize after cuts in the federal funds rate.
The issue is topical, as many investors and analysts expect rate cuts to be implemented soon given that signs of an economic slowdown are beginning to proliferate.

Market expectations about the direction of administered interest rates have changed significantly since last November. [PT]

Today I want to examine a market that reacts differently to rate cuts than one would perhaps expect: the foreign exchange market.

What is the Effect of Fed Actions on Exchange Rates?
The

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How Do Stock Prices React to Rate Cuts by the Fed?

June 20, 2019

The “Greatest Economy in History” Stumbles
“This is the greatest economy in the history of our country”, Donald Trump opined just a few months ago.
Alas, recently there is growing evidence of an economic slowdown.

The Morgan Stanley MSBCI business conditions gauge plummets to its lowest level since 2008, as recent economic data releases ominously persist in disappointing. [PT]

This has fueled speculation of imminent rate cuts by the Fed. You may therefore wonder: how do stock prices typically respond to rate cuts by the central bank?

The Fed Does Have an Effect on Stock Prices
The effect of rate cuts can be examined with the help of the Seasonax app. Its charting tool provides the quickest way of studying the impact of exogenous

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The Effect of Earnings Season on Seasonal Price Patterns

April 11, 2019

Earnings Lottery
Shareholders are are probably asking themselves every quarter how the earnings of companies in their portfolios will turn out. Whether they will beat or miss analyst expectations often seems akin to a lottery.

The beatings will continue until morale improves… [PT]

However, what is not akin to a lottery are the seasonal trends of corporate earnings and stock prices. Thus breweries will usually report stronger quarterly earnings after the summer season than after the winter season. You may not believe this to be possible, but many analysts are actually still surprised when breweries report strong numbers after the summer season. Share prices will often rise in such situations.

Technology Stocks Also Exhibit Seasonal

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Intraweek Profit Opportunities

March 13, 2019

In 6 of 10 Countries a Single Day Outperforms the Entire Week!
In the Seasonal Insights issue of 13 February 2019 I presented a study illustrating the power of intraweek effects. The article was entitled “S&P 500 Index: A Single Day Beats the Entire Week!” The result of the study: if one had been invested exclusively during a single day of the week since 2000  – namely on Tuesday – one would have outperformed a buy and hold strategy, beating the broad market.
Moreover, one would have achieved opportunity gains, as it would have been possible to invest in other profitable assets over the remaining 80% of the time.
But what is the situation on the global level? Perhaps there are intraweek profit opportunities in international markets as

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The Strongest Season for Silver Has Only Just Begun

January 17, 2019

Commodities as an Alternative
Our readers are presumably following commodity prices. Commodities often provide an alternative to investing in stocks – and they have clearly discernible seasonal characteristics. Thus heating oil tends to be cheaper in the summer than during the heating season in winter, and wheat is typically more expensive before the harvest then thereafter.

Silver: 1,000 ounce good delivery bars [PT]

Precious metals are also subject to seasonal trends.  Today I want to put silver under a magnifying glass on your behalf. Its price has lagged the gold price significantly – the gold-silver price ratio currently stands above 80, which is close to historic highs.
Are seasonal patterns currently suggesting a positive outlook

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Christmas Crash or Santa Claus Rally?

December 13, 2018

The Santa Claus Rally –  A Well-Known Recurring Phenomenon
every year a certain stock market phenomenon is said to recur, anticipated with excitement by investors: the so-called Santa Claus rally. It is held that stock prices typically rise quite frequently and particularly strongly just before the turn of the year.
I want to show you the Santa Claus rally using the Dow Jones Industrial Average (DJIA) as an example. The DJIA has a very long history and is therefore particularly useful for conducting a long-term analysis.

Santa Claus, usually known as a reliable purveyor of presents, occasionally steps on something. When he does, it can be fatal. That said, December crashes are historically so rare, one needs only one finger to count them.

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Trump or Seasonality: Which One is Going to Prevail in the Dollar’s Late Year Surge?

December 3, 2018

A Plethora of Headaches
We hope the recent market turmoil is not giving our readers too much of a headache. As you are no doubt aware, the events of the last few weeks have made maneuvering around global markets rather difficult.

A less than happy NYSE floor trader [PT]
Photo crdit: Brendan McDermit

The US faces uncertain economic times, as Trump and Xi Jinping remain locked in a bitter trade dispute that is likely to go on for some time, creating uncertainty for the future of economic relations between the world’s two biggest economic powerhouses [ed note: over the weekend news emerged that Trump and Xi agreed on a truce and no further escalation in the dispute should be expected for the time being, but it remains to be seen whether

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The Interesting Seasonal Trends of Precious Metals

November 19, 2018

Precious Metals Patterns
Prices in financial and commodity markets exhibit seasonal trends. We have for example shown you how stocks of pharmaceutical companies tend to rise in winter due to higher demand, or the end-of-year rally phenomenon (last issue), which can be observed almost every year. Gold, silver, platinum and palladium are subject to seasonal trends as well.

Although gold and silver are generally perceived to trend in the same direction, there are actually big differences in their seasonal trends [PT]

Seasonal Analysis with our Web App
We have used our Web App (app.seasonax.com) to show you the seasonal trends in prices for precious metals. The chart below depicts the seasonal pattern of the gold price. It shows prices over

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Revisiting the Halloween Effect

November 9, 2018

From Crash Danger to End-of-the-Year Ramp

[Ed note by PT: we are unfortunately a week late in posting this issue of SI, which didn’t reach us in time due to a technical problem. We decided to post it belatedly anyway: for one thing, the effect under discussion is normally in effect until the end of the year; for another, the statistical validity of this information goes beyond the current year, as it is a recurring phenomenon. Lastly we would note that we have a strong suspicion that the effect may actually be cut short this year – details to be discussed in a follow-up post]

Knock, knock… it’s Jack, from Wall Street

After the last day of October, the month that has investors in fear of the next big stock market crash follows Halloween

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How Dangerous is the Month of October?

October 7, 2018

A Month with a Bad Reputation
A certain degree of nervousness tends to suffuse global financial markets when the month of October approaches. The memories of sharp slumps that happened in this month in the past – often wiping out the profits of an entire year in a single day – are apt to induce fear. However, if one disregards outliers such as 1987 or 2008, October generally delivers an acceptable performance.

The road to October… not much happens at first – until it does. [PT]

Nevertheless, the prospect of such an extremely strong decline is scary: what use is it to anyone if markets typically perform well in October most of the time, when  the phenomenon of the gains of an entire year evaporating in the blink of an eye is repeated?

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Seasonality in Cryptocurrencies – An Interesting Pattern in Bitcoin

September 26, 2018

Looking for Opportunities
The last time we discussed Bitcoin was in May 2017 when we pointed out that Bitcoin too suffers from seasonal weakness in the summer. We have shown that a seasonal pattern in Bitcoin can be easily identified. More than a year has passed since then and readers may wonder why we have not addressed the topic again. There is a simple reason for this: the lack of extensive historical data for cryptocurrencies in combination with their extreme volatility.

The three Magi: Melchior tries to move with the times. [PT]

This market will therefore become even more interesting for seasonal analysis once it becomes less volatile. However, crypto is still one of the hottest topics in finance. We have therefore decided to

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September – The Most Dangerous Month to Invest

September 6, 2018

The Biggest Crashes in History Happened in September and October
In the last installment of Seasonal Insights we wrote about the media sector – an industry that typically tends to perform very poorly in the month of August. Upon receiving positive feedback, we decided to build on this topic. This week we are are discussing several international markets that tend to be weak during September and will look at what drives this recurring pattern.

Mark Twain, a renowned specialist in how not to get rich, opines on dangerous months to invest in the stock market. We should mention that he didn’t have access to the Seasonax app. [PT]

When you ask investors what they believe to be the worst month of the year for the stock market, most would

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Evade Market Weakness in the Summer by Shifting Your Perspective

August 23, 2018

Alternating Seasonal Patterns
In the last issue of Seasonal Insights we have talked to you about biotech and pharmaceutical companies as industries that withstand the traditional summer weakness in stock markets. Six weeks ago, we have shown that gold is an asset one can purchase in the summer months to offset this phenomenon.

Warning: don’t let the media mesmerize you in the summer months – the stocks of media companies are a veritable seasonal minefield in August to October. [PT]
Illustration via crabo.ru

Naturally, investors also have the option to use traditional patterns in a different way. In this issue we will show you how a distinct seasonal pattern which generates recurring losses represents an opportunity to profit by going

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“Sell in May” Chart Update – The Impressive Market Weakness in the Summer Half-Year All Over the World

June 1, 2018

The Details Plotted
In the last issue of Seasonal Insights I showed you the statistics associated with the popular truism “sell in May and go away” in the countries with the eleven largest stock markets. The comparison divided the calendar year into a summer half-year from May to October and a winter half-year from November to April. In all eleven countries, the winter half-year outperformed the summer half-year. As announced on that occasion, here are the details for all countries that were reviewed.

October meeting after not selling in May

The Half-Year Patterns of Eleven Selected Countries
Below are the respective price patterns in the form of charts. These show the chained stock market performance in all eleven countries during the

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“Sell In May And Go Away” – A Reminder: In 9 Out Of 11 Countries It Makes Sense To Do So

May 24, 2018

A Truism that is Demonstrably True
Most people are probably aware of the adage “sell in May and go away”. This popular seasonal Wall Street truism implies that the market’s performance is far worse in the six summer months than in the six winter months. Numerous studies have been undertaken in this context particularly with respect to US stock markets, and they  confirm that the stock market on average exhibits relative weakness in the summer.

Look at the part we highlighted – it is downright eerie, Mark Twain somehow knew! [PT]

What is the status of the “sell in May” rule in other countries though? I have examined the patterns in the eleven most important stock markets in the world..

The Eleven Largest Markets in the World Under the

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Global Turn-of-the-Month Effect – An Update

May 17, 2018

In Other Global Markets the “Turn-of-the-Month” Effect Generates Even Bigger Returns than in the US
The “turn-of-the-month” effect is one of the most fascinating stock market phenomena. It describes the fact that price gains primarily tend to occur around the turn of the month. By contrast, the rest of the time around the middle of the month is typically far less profitable for investors.

Good vs. bad seasonal timing…   [PT]

The effect has been studied extensively in the US market. In the last issue of Seasonal Insights I have shown a table detailing the extent of the “turn-of-the-month” effect in the eleven largest international stock markets.
The result was that overseas markets also tend to be significantly stronger around the turn

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The “Turn of the Month Effect” Exists in 11 of 11 Countries

April 18, 2018

A Well Known Seasonal Phenomenon in the US Market – Is There More to It?
I already discussed the “turn-of-the-month effect” in a previous issues of Seasonal Insights, see e.g. this report from earlier this year. The term describes the fact that price gains in the stock market tend to cluster around the turn of the month. By contrast, the rest of the time around the middle of the month is typically less profitable for investors.

Due to continual monetary inflation in the fiat money system and the “survivor bias” inherent in stock market index construction, nominal stock prices are rising 67% of the time. Nevertheless the long term uptrend in nominal prices is subject to countless recurring seasonal patterns. The market as a whole on

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Trendline Broken: Similarities to 1929, 1987 and the Nikkei in 1990 Continue

March 27, 2018

Anatomy of Waterfall Declines
In an article published in these pages in early March, I have discussed the similarities between the current chart pattern in the S&P 500 Index compared to the patterns that formed ahead of the crashes of 1929 and 1987, as well as the crash-like plunge in the Nikkei 225 Index in 1990. The following five similarities were decisive features of these crash patterns:

– a rally along a clearly discernible trendline on a linear chart
– an accelerated move toward a peak at the end of the advance
– an initial decline testing the trendline
– a counter-trend rebound
– a break of the trendline

After the trendline was broken, waterfall declines began in the three antecedents of 1929, 1987 and the Nikkei in 1990. In

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US Stock Market: Conspicuous Similarities with 1929, 1987 and Japan in 1990

March 4, 2018

Stretched to the Limit
There are good reasons to suspect that the bull market in US equities has been stretched to the limit. These include inter alia: high fundamental valuation levels, as e.g. illustrated by the Shiller P/E ratio (a.k.a. “CAPE”/ cyclically adjusted P/E); rising interest rates; and the maturity of the advance.

The end of an era – a little review of the mother of modern crash patterns, the 1929 debacle. In hindsight it is both a bit scary and sad, in light of the important caesura it represented. In many ways the roaring 20s were the last hurrah of a world in its death throes, a world that never managed to make a comeback. The massive expansion of the State that had begun in the years just before WW1 resumed in full

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Market Efficiency? The Euro is Looking Forward to the Weekend!

February 22, 2018

Peculiar Behavior
As I have shown in previous issues of Seasonal Insights, various financial instruments are demonstrating peculiar behavior in the course of the week: the S&P 500 Index is typically strong on Tuesdays, Gold on Fridays and Bitcoin on Tuesdays (similar to the S&P 500 Index).
 
The quest for profitable foresight…[PT]
 

Several readers have inquired whether currencies exhibit such patterns as well. Are these extremely large markets also home to such statistical anomalies, or is market efficiency winning out in this case?
Let us take a closer look.
 
The Euro: Weak on Mondays, Strong on Fridays
Below I examine the performance of the EUR-USD exchange rate broken down by individual days of the week.  The chart shows the annualized performance of EUR-USD since 2000 in black, as

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Seasonality of Individual Stocks – an Update

February 9, 2018

Well Known Seasonal Trends
Readers are very likely aware of the “Halloween effect” or the Santa Claus rally. The former term refers to the fact that stocks on average tend to perform significantly worse in the summer months than in the winter months, the latter term describes the typically very strong advance in stocks just before the turn of the year. Both phenomena apply to the broad stock market, this is to say, to benchmark indexes such as the S&P 500 or the DJIA.
 
Summer and winter in the stock market…  [PT]
Illustration via CNNMoney
 

A number of individual stocks have their own “seasons” though, i.e., certain individual stocks have a habit of diverging from the major indexes and exhibit seasonal patterns of their own. I will illustrate this with an example that is relevant for

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The FOMC Meeting Strategy: Why It May Be Particularly Promising Right Now

January 30, 2018

FOMC Strategy Revisited
As readers know, investment and trading decisions can be optimized with the help of statistics. One way of doing so is offered by the FOMC meeting strategy.
 
The rate hikes are actually leading somewhere – after the Wile E. Coyote moment, the FOMC meeting strategy is especially useful [PT]
 

A study published by the Federal Reserve Bank of New York in 2011 examined the effect of FOMC meetings on stock prices.  The study concluded that these meetings have a substantial impact on stock prices – and contrary to what most investors would probably tend to expect, before rather than after the committee announces its monetary policy decision.
 
S&P 500, average behavior around the FOMC announcements over the past 30 years (240 events) – the statistics in this chart

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2018: The Weakest Year in the Presidential Election Cycle Has Begun

January 12, 2018

The Vote Buying Mirror
Our readers are probably aware of the influence the US election cycle has on the stock market. After Donald Trump was elected president, a particularly strong rally in stock prices ensued.  Contrary to what many market participants seem to believe, trends in the stock market depend only to a negligible extent on whether a Republican or a Democrat wins the presidency. The market was e.g. just as strong under Democratic president Bill Clinton as it was under Republican president Ronald Reagan.
 
The mid terms specter.
 

From a statistical perspective, the decisive factor for the market trend is not the party allegiance of the president, but rather the year of the presidency. In this context we speak of the presidential cycle, which has a distinct pattern over its

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Palladium – The Metal for the Discerning Speculator, or The Simple Way of Doubling Profits in Palladium

December 21, 2017

Misbehaving Metals
In past issues of Seasonal Insights I have discussed the very odd behavior of a variety of instruments in the course of the typical week: in issue 17 the topic were intra-week moves in S&P 500 Index, and in issue 18 the no less interesting intra-week pattern in Bitcoin.
In issue 22 I moved on to the “Strange Behavior of Gold Investors from Monday to Thursday”, which was followed by an examination of the associated pattern in silver a week later.
 
The metals back when they were young. Their behavioral issues became evident at an early age already, and the passage of time has done nothing to alleviate them. Our pal palladium is a particularly obnoxious specimen, known for spending his Fridays sneaking up on and murdering unsuspecting and by now nearly extinct bears in

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The Santa Claus Rally is Especially Pronounced in the DAX

December 7, 2017

The Gift that Keeps on Giving
Every year a certain stock market phenomenon is said to recur, anticipated with excitement by investors: the Santa Claus rally. It is held that stock prices typically rise quite frequently and particularly strongly just before the turn of the year.
 
Unbeknown to many, Santa Claus paid a high price for enriching investors [PT]
 

I want to show you the Santa Claus rally in the German DAX Index as an example. Price moves are often exaggerated in the German stock market, which leads to quite pronounced – and hence profitable – seasonal trends.
 
Recurring trends can be discerned at a glance on a seasonal chart
The chart below is not a standard chart that depicts a price trend over a specific time period. Rather, this seasonal chart shows the typical seasonal

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The Precious Metals Bears’ Fear of Fridays

November 22, 2017

Peculiar Behavior
In the last issue of Seasonal Insights I have shown that the gold price behaves quite peculiarly in the course of the trading week. On average, prices rise almost exclusively on Friday. It is as though investors in this market were mired in deep sleep for most of the week.
 
The title of this blog post is a play of words on the title of an early Wim Wender movie, The Goalkeeper’s Fear of the Penalty, which in turn is based on a famous novel by Peter Handke (sometimes the title is also translated as “The Goalie’s Anxiety at the Penalty Kick”) [PT]
 

Upon this I received a plethora of inquiries from readers regarding the corresponding moves in silver.  In response  examine the behavior of the silver market on individual days of the week in this issue of Seasonal

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The Strange Behavior of Gold Investors from Monday to Thursday

November 8, 2017

Known and Unknown Anomalies
Readers are undoubtedly aware of one or another stock market anomaly, such as e.g. the frequently observed weakness in stock markets in the summer months, which the well-known saying “sell in May and go away” refers to. Apart from such widely known anomalies, there are many others though, which most investors have never heard of. These anomalies can be particularly interesting and profitable for investors – and there are several in the precious metals sector as well.  Today I am going to introduce one of those to you.
 
As Donald Rumsfeld, former secretary of defense knew, there are things we know we know, things we know we don’t know, and things we don’t know we don’t know (unfortunately he neglected to consider that there are also things we think we know

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Is a Rapid Advance in the Japanese Stock Market Imminent?

October 26, 2017

Japanese Market About to Break Out
The Japanese stock market is quite unique: it would need to rally by approximately 80% to reach its former historical peak. What’s more, said peak was attained on the final trading day of 1989, more than 25 years ago. In short, Japanese stocks have been anything but a good investment in recent years.
Conversely this means that the market has a lot of potential if it were to return to its former heights. It also means that the Japanese market hasn’t mirrored the excesses evident in many other stock markets.  The chart below shows the Nikkei 225 since its late 1989 peak.
 
Nikkei 225, 1989 – 2017. Japanese stocks have entered a new uptrend. Japanese stocks are actually still quite cheap compared to current global standards. The advance looks quite good so

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