Dark Pool Prints and Seasonal Patterns

Tuesday February 07, 2017

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Over the last few decades like most traders, I’ve trained myself to search for patterns in the stock market. If history repeats itself, why not take full advantage of it by being prepared for it. 

I use Equity clock’s seasonality charts.  Equity Clock is a division of the Tech Talk Financial Network, a market analysis company that provides technical, fundamental and seasonality analysis daily.

The most popular ETF to trade right now is the SPY. It has the most liquidity and it tracks one of the most popular Indexes in the world, the S&P 500 Index.   Below is the EquityClock.com 10-Year Cycle Seasonality chart for years ending in “6” for the S&P 500.

This chart below was meant to predict what the S&P 500 chart would do for 2016.  This is like having your very own crystal ball month by month into where the market is going to rally and where it is going to correct itself.  Don’t trust me, look at this chart for yourself.


As per this chart for 2016, the S&P 500 was supposed to rally from the end of January to April. Next it was set to correct from April to end of May, rallying from May to June, and then set to pullback going into July with a rally slightly in August.

Per this chart, the S&P 500 was set up for a bigger correction going into October leading into a massive rally into the New Year.

Below is a chart of what the SPY did for 2016.



The S&P 500 did rally from the end of January until April, where it had a slight correction, rallied back up to August where we had a bigger correction and then had a massive rally until the end of the year.  Amazing, right?

So, what does 2017 look like? Below is Equity Clock’s Seasonality chart for years ending in “7”


The S&P 500 is supposed to have a huge rally up until July, then a correction from July to September, with a small rally up to October finishing with a massive correction from the end of September into October.  The S&P 500 is expected to have a small bounce into December.

I know I feel a little better knowing that this could be a possibility of the year to come. I’ll certainly prepare myself for a market top possibility in July.

But wait there’s more, we have a post-election year Seasonality chart. Per Equity Clock, this is the most popular pattern after a new election for the President of the United States.



 

On this chart, the S&P 500 is set to rally in January, but have a correction into February.  Next, it’s set to rally from April until July leading into a much bigger correction into October finishing with a rally until the end of the year.

If you combine both charts, the seasonality for years ending in “7” and the Post-Election Year Seasonal chart, you’ll see one main similarity.

On both charts, we have a big rally topping out in July followed by a large correction into October.

I have one last pattern to share with you and this one is the most interesting of them all.  There has been a big correction pattern after a president has been in office for 2 straight terms.

This pattern goes back to 1968, and after each of these presidents served their 2 terms, the market has had a big correction. Look below.



 

If we combine all these charts together we could come to a conclusion that we could get a big correction that would start at the end of July, according to historical patterns.

Patterns are great, but we need to see the prints to confirm.  Every buy and sell is recorded and printed in our time and sales window.  The prints that I’m referring to are the dark pool prints.

These trades move the market up and down.  These are the big guys. I’m referring to Barclays and Goldman Sachs, the two biggest dark pools out there. News always comes late, it’s the prints, the trades that always come first. Everybody is calling this latest rally the trump rally. They really believe that Donald Trump is responsible for this massive rally we just had.  I’m going to let you in on a little secret.

The Dark Pool was buying a few days before the election.  How do I know this?  I have pictures of it, in fact I posted them up on my twitter feed @volumeprintcess.  I also posted them up on Stocktwits @the_stock_whisperer.

Here was my tweet from November 7th 2016 showing the late dark pool buy prints on the SPY from November 4th 2016.


 

In every rally and in every correction, that we’ve ever had, the dark pool was buying and selling way before it happened. Especially before Brexit, we saw the dark pool selling in early June.

I’ve captured all the Dark Pool’s movement over the past years and this is what I use to teach traders all over the world.  I don’t’ really have a crystal ball, I just follow the prints and the patterns.

Until next time,

Stefanie Kammerman

Comments
Jake B
Excellent article. Very informative - thanks.
2/7/2017 3:14:11 PM