For nearly 50 years, the Hirsch Organization, a stock market research firm, has studied the stock market's ebbs and flows.

It's discovered that the market moves in cycles and patterns according to the seasons, presidential terms, wars and other major events. Jeffrey Hirsch explains how to analyze these patterns and trade accordingly in his latest book, "The Little Book of Stock Market Cycles," released this month by Wiley. Hirsch is chief market strategist at Magnet AE Fund LP, editor-in-chief of the "Stock Trader's Almanac" newsletter and president of the Hirsch Organization, a stock-market research firm.

There are many stock market cycles, ranging from the long-term cycles that last a decade or more, to multiyear cycles, to seasonal and short-term patterns down to daily cycles. In my book, I highlight the most pervasive and discernible market cycles that continue to influence the market to this day. The long- term cycle of secular bull and bear markets has been driven by the cycle of war and peace, financial crisis and inflation.

The three secular bears of the 20th century surrounded the three major wars: World War I, World War II and Vietnam. Once crisis dissipates and the troops come home, inflation kicks in and holds the market in its range for several more years.

As inflation tapers off and government begins to function properly again, getting out of the way of the private sector where appropriate and aiding effectively, the market takes off again on a steady diet of new enabling and a cultural-paradigm-shifting technology. In the s, it was the automobile. In the s and s it was TV, space exploration, home appliances and the military industrial complex. In the s and s, the information revolution built the microprocessor, the Internet, and cellular communications, fueling the longest boom in modern times.

Within these secular bull and bear markets, the stock market is influenced by the four-year presidential cycle and seasonal market patterns. The election of a U. Right now we are in the second half of the secular bear that started in , but in a cyclical bull that began in October We are also in the seasonal "Worst Six Months" of the year April to October.

This is based on technical support and resistance levels in conjunction with the seasonal and cyclical patterns I track as well as fundamental valuations.

When do you expect the next market cycle or "super boom" to begin? What will bring it about? For now, a cyclical trading discipline should be more effective than buy and hold.

I do not claim to know the future nor the sectors that will lead it. My super-boom forecast is based on historical patterns that have persisted for generations. I believe the sectors that are most likely to lead the next super boom are going to be new.

Most likely they will be areas not yet invented or currently brewing in some lab or garage.

Seasonal Stock Market Trends: The Definitive Guide to Calendar-Based Stock - Jay Kaeppel - Google Livres

However, there are two areas I suspect may be involved. With our ever-aging and expanding population and insatiable demand for energy, biotech and energy technologies are prime candidates. Perhaps something that reverses the aging process that would make Ponce de Leon roll over in his grave or something that makes us energy-self-sufficient.

The quarterly and annual operations of institutions and the seasonal behavior of society and individuals have created a best and worst six months of the year. Our "Best Six Months Switching Strategy" revolves around the fact that most of the market's gains occur from November to April, while the market is usually flat to down from May to October. Market seasonality is a reflection of cultural behavior.

In the old days, farming was the big driver, making August the best market month; now it's one of the worst. During the summer, traders and investors prefer the golf course, beach, or poolside to the trading floor or computer screen. In the fourth quarter, institutions' efforts to beef up their numbers help drive the market higher, as does holiday shopping and an influx of year-end bonus money.

The New Year tends to bring a positive new-leaf mentality to forecasts and predictions and the anticipation of strong fourth- and first-quarter earnings. After that, trading volume tends to decline throughout the summer and then in September, there's back-to-school, back-to-work, and end-of-third-quarter portfolio window dressing that has caused stocks to sell off in September, making it the worst month of the year on average.

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