This year, the seasonal market trends were a bust. The majority just did not pan out.

But, that really is not anything novel. If you do a 25 year chart on the main indices, you will observe that some years basically don’t work. However what you will also find out is that in most years, they usually do.

What does that indicate for us going into 2010?

It means that 2009 was one of those odd years where seasonality did not work meaning that in 2010, seasonality will in all probability work again.

The opening recurring trend will be upon us in just a couple of weeks, so let’s do a fast review.

The stock market has comparatively consistent and reliable recurring trends. You ought to understand the most important seasonal trends, given that this knowledge can stop you from being extremely bullish at a seasonal peak or excessively bearish at a seasonal low.

In a nutshell, the general trends favor a decline in early January (possibly profit-taking selling), followed by a mid-January rally. By late March or early April the market often reaches a peak, followed by a irregular market in mid-April, possibly related to the April 15 tax deadline. The early summer months are frequently characterized by a midsummer rally, culminating in a market top in late July or early August. September and October are typically down months in the stock market (witness the 1929 Crash and the 1987 October decline), with the lows taking place sometime in late October (a good buying opportunity?). The trend into the end of the year is typically bullish, with the first two weeks in December characterized by a strong market. The Christmas holidays are usually quiet, with jerky and thin markets. There are continually exceptions to these genuine trends, but the overall pattern is surprisingly consistent.

Print this article if you have to and stick it near your trading screen. I think that because 2009 was a rare bust for the majority of the recurring trends discussed above, 2010 will be an on year. One of the major errors amateur traders make is that they get sniped by more advanced fighters who know the seasonality trends.

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