SECTOR SEARCH
“Tis the Season
In this episode of Sector Search, we will discuss the concept of “Seasonality” in the equity markets. As noted in our previous Sector Search – Finding Sectors, dated 6-25-24, there are several investing styles, strategies, and time availability, that may decide whether one invests in, or trades, sectors, rather than individual stocks. There are many avenues in which to invest in, or trade, certain industries, including the use of Exchange Traded Funds (ETFs), explained in our publication When to Buy and When to Sell: Combining easy Indicators, Charts and Financial Astrology (available on Amazon).
Seasonality is the concept of investing in certain sectors during their historically strongest time of the year. For example, retail stocks tend to rise just prior to the holiday season, while outdoor equipment and activity stocks may peak early Spring. Semiconductor/chips stocks, like Nvidia (NVDA) have “pockets” of seasonality including Valentine’s Day week and the month of July, when they have increased in price 100% of the time over the past 5 years. Indexes also follow some seasonal patterns with the S&P annually strong in the Spring/early Summer and the Fall, and usually weaker in late Summer and Winter. Many stocks have their own seasonality pattern, which can be researched on the internet. Another example is Apple (AAPL), that has a high probability of rising in price in the months of March, June, July, November, and December. This does not mean, however, that the price action in these months begins on the 1st and ends on the last, so do your due diligence before opening a position. Seasonality based positions are generally a strategy for all types of investors and traders, for both favorable entry points and swing trades.
Sector “rotation” (as discussed in our Sector Search – Morning Scan blog, dated 10-25-24) is another common strategy that many professionals utilize based on seasonality, interest rate changes, earnings, perception of change, and cycles. This strategy is based on “jumping” between certain sectors during changing economic conditions, and can be beneficial to those actively involved with the markets and/or familiar with these time events. They can move rather fast, however, and this strategy is not normally beneficial to long-term investors.
Additionally, when a stock or industry is approaching a seasonally strong or weak period, combining some technical indicators, like moving averages, relative strength, or support and resistance (to name a few), can be used to confirm and verify the direction. Remember that these historical figures lend to the probability of a repeated outcome, not the certainty of it.
Astrologically, there are also signifiers that suggest favorable times for potential investment opportunities in an industry or sector. Planet transits and aspects, in zodiac signs (also noted in Chapter 4 of our publication), often symbolize, or “rule” different industries based on positioning in the sky, comparable to cycles and repeated patterns in the market.
The “outer” planets (Saturn, Uranus, Neptune, and Pluto) possess longer lasting energies, and often coincide with sector growth and long-term Moving Average trends. The planet Jupiter, is the best example, however, as it is known to heavily effect certain sectors related to the sign in which it is positioned, as it expands energies and has a positive connotation (please see our Planet Power - Jupiter Effect blog, dated 3-27-24 for more details). Jupiter will soon be transiting the sign of Cancer, beginning June 9 (for about 1 year), which symbolizes potential gains in sectors like silver and real estate related stocks, while Pluto in Aquarius (much longer term) will continue the AI and robotics themes.
The “inner” planets (Moon, Mercury, Venus, and Mars), as we often discuss in our blogs, are shorter term signifiers concerning the financial markets. For those who utilize planetary motion, the Moon is more of a focus for day-traders, while Mercury, Venus, and Mars can be used by swing-traders.
Please stay tuned for future “Sector Search” blogs, as well as other related blogs that include favorable industries to focus on during specific economic and astrological conditions.
***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of current economic conditions/movements in the sky, and how they can affect moods, behaviors, world events, and financial markets.
