Bullish Seasonality Ahead

May 26, 2006 · Print This Article

The pre-holiday trading session left much to be desired. Typical low-volume trading occured as most market makers were starting the long holiday weekend a little early. Certainly, nothing out of the ordinary.

The day began with a gap opening and a trade was signaled in our strategy. Shortly after the open we were able to close out our position for a decent 9.3% gain. Coming off the heels of a losing trade, today’s success in the Gap Fade strategy was certainly a good way to enter the holiday weekend.

All of the major indices are back in neutral territory and the upcoming bullish seasonality (Memorial Day) could push the indices into overbought territory. However, the trading session after the holiday is quite bearish. So we might have to wait until Wednesday to see the strong seasonal bullishness kick in. How the market responds once (and if) it reaches an overbought state should be quite telling for the intermediate future.

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