End of month bull market tendencies.

In bull markets there is a tendency to sell the end of the month and buy the first of the month. This is also a time when there is rotation among markets. We look at markets on a relationship basis. By looking at these relationships we can adjust our execution, be bigger or smaller or not at all and closer or farther away from risk price. The key is looking at all markets on a relative basis.

The core of trading is understanding what the market thinks is most important. Or said another way, the market(s) that move to areas where they have to do something. These are most likely to occur when a market is in a critical area. What it does in that critical area will effect the S&P 500. How the S&P 500 acts in those times is the beginning of the story about to be played out.

There is always going to be an upside leader and a downside leader. When the market is moving in those respective directions they become important. The first and the last day of the month is a good time for the rotation. Really any time gives the market the opportunity to rotate but this is the time where they make a conscious effort.

Remember the market corrects eventually, either the leaders to the laggers or laggers to the leaders. When this happens it creates a clear picture and those are the times when you really have a chance to take from them. What you do between those times determines how you finish.

So I said typical bull market action, there is no money to be made from tendency especially in our current markets. Too many professionals. Also by the time you see the pattern forming it could be too late. Tendencies are not so you do not have to do the work but a sure bet as a time when they provide extra information.  And just because it happens it does not mean it can be written in stone, in the current market.



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