One of my readers who goes by the callsign of ‘captainboom’ yesterday in passing mentioned that the week before the 4th of July was traditionally a bullish month, which of course peaked my interest. I used to work with a very talented statistician a few years ago going by Volar who among other things regularly posted very compelling seasonal analysis. I’m in the process of recreating some of that work in Quantopian but until then I think a glance of some of Volar’s general seasonal stats over the past fifty years should suffice.
The longest day of the year has arrived but most of Europe has already been sizzling for the past few weeks. Down here in Spain we regularly have been touching the 35 Celsius scale which is about 95 Fahrenheit for all you metricphobic North Americans. Although I love to bitch about the cold during the winter what really irks me the most is the insufferable summer heat here in Valencia which unfortunately comes with a ton of humidity – we’re talking 80% plus at times. Which is quite different from the dry desert like heat I had gotten accustomed to living in California for about 20 years.
Limbo tape – it’s what I call the annoying volatile sideways churn devoid of technical context we’ve been experiencing across the board since the beginning of June which has pushed retail into an early summer identity crisis. You may recall that it’s not the first time I’m talking about limbo tape and it probably won’t be the last. Now this may be a good time to once more remind everyone that we as retail traders have one principal advantage over fund managers or institutional participants such as trade desks or system operators.
It’s relatively quiet morning thus far which gives us time for another exercise in tape reading. This time we are going to take a more in depth look at equities and cover a few tell tale signs that tell us if and when the market has transitioned into another distinct phase. Let’s start with the Zero: