Can seasonal transitions help a trader?

Discussion in 'Trading' started by Joe Ross, Dec 4, 2009.

  1. Yes! Seasonal transitions create workable Spread strategies. I'll let my friend Jerry Toepke, an expert in seasonal fundamentals, answer. Jerry! You have the floor:

    "Change gives birth to risk - but also creates opportunity. Seasonal transitions create workable spread strategies because markets have to struggle to maintain equilibrium between supply and demand as conditions undergo dynamic change through time.

    "The transition from one crop year to the next in any market can sometimes be difficult; but the coexistence of prospects for huge new supply, damage to the crop, and heavy consumption can create extreme tension. Final old-crop inventories can be neither too much nor too little. If old-crop inventories are too great, they can burden new-crop prices throughout the following year. If old-crop inventories are too small, they can aggravate any crop problem amidst the season of heavy consumption. Until harvested, the new crop faces the potential for weather, disease, insect, or damage from a variety of natural or man-made disasters. Therefore, the contract representing new-crop production must balance prospects for both new supply and any sort of disaster.

    "Prices tend to decline as supply peaks. But the market has often changed thereafter. When prices are low, stocks begin to decline. By about a month before harvest, the market may begin to build in a premium to offset the risk of something going wrong.

    "But does the market prefer old-crop security - or new-crop prospects? Though not often dramatically so, it has tended to adhere to the philosophy of 'a bird in the hand is worth two in the bush.'

    "Next, let's look at a seasonal spread trade that has nothing to do with crops or harvest. A good example would be crude oil. Demand rests primarily in two areas of seasonal product consumption - gasoline in summer, and heating oil in winter. In both cases, inventory accumulation precedes peak consumption. In spring, for example, steadily improving driving conditions increases daily consumption even as the industry accumulates supplies for the opening of the summer vacationing and driving season. This combination accelerates demand for gasoline - and therefore for crude oil to refine. Accelerating demand tends to drive prices - and bull spreads.

    "Its corresponding dynamic tends to begin in August, during which refiners often shut down temporarily to perform maintenance and to retool facilities. When they return, the industry begins the process of accumulating inventories of heating oil. As refineries gear up to produce at capacity, demand for crude oil accelerates into October - often driving bull spreads."
  2. Funny, but this topic (seasonal spreads) is what your advisory does. It seems odd you put energy into this if you say it is "Andy's" advisory.

    It is sad that you are defying the site's terms of service, and tainting your (relatively clean) industry reputation.

    Please desist. The sponsors pay for this right, you have not.
  3. The first time I heard of it was so obvious. I cannot imagine anyone NOT seeing the pattern of nature.
  4. Before you go off judging other people you need to find out the facts. We have had a long-standing, over 20-year relationship with Jerry Toepke and MRCI. We have sent them more customers than anyone on earth. We do not steal anything from them.

    Sure we use some of their seasonal trades, but we also have our own vast library of seasonal trades collected by me personally for over 50 years.

    Jerry wrote the forward to my spread book. Jerry and Andy are well-known to each other, and have communicated numerous times about spread trading.

    MRCI is well-aware of Traders Notebook and what is taught there.

    Traders Notebook is one of the most successful spread advisories in the world--perhaps the most successful.

    I don't know what you are complaining about. MRCI is not complaining.
  5. 4XQs


    Great link, Goldtrader. Sometimes I wonder if the 'negativity' around seasonality comes from people making a buck from it :)
  6. You are missing the point. The point is, you are promoting your business concepts on ET without paying ET for a sponsorship.

    And again, in another thread, you said it was ANDY'S advisory even though I pointed to the text that said you were at its center, on your site and in your emails you send out.

    And THIS thread is promoting yourself in the very subject that you sell advisory services in - seasonal spreads.

    Never said MRCI.
  7. I post here in an effort help others. If you don't see it that way, then that's your problem, not mine.
  8. "We have had a long-standing, over 20-year relationship with Jerry Toepke and MRCI"

    We? What happened to when you said the advisory belonged to Andy? Although the website puts you in the center?

    Is it yours or not? You are confusing "helping people" with avoiding the question about why you deserve free publicity when sponsors have to pay.

    Advertisers claim their stuff "helps people." But the paying sponsors are the ones who support this site.