Bonds-

Seasonality- over the long term the tyx seasonal peak is 1st week in May; the last 5 years it has peaked approx as follows: 5/15/01; 3/31/02; 4/10/03; 5/15/04; 3/25/05... a little earlier on average but consistent with seasonal historic pattern.

Rydex Sentiment- Rydex bullish flows at extreme lows. I would like to see the 20 dma of the ratio (bull/bear) to flatten/turn to become more positive (along with a break of the uptrend in yields themselves).

Closed end fixed income funds- another sentiment gauge saw similar discounts hit in 9/1990; 9/1994; 11/99. The TYX peaked within 2 months of these past extremes.

Contrary to my own perception is the fact the bullish seasonal period for bonds May-Dec is the same as the seasonal period which is bullish for GOLD.

Stockman,

do you not believe that seasonal patterns in financial markets are figments of mere coincidence?

I liken the market consensus to a highly intelligent (but, not always right) being which factors seasonality into market prices.

Thoughts?

g034-

It appears that we will have another run at breaking through $600 resistance. More talk from China about diversifying reserves.

With all these rate hikes it is significant that the dollar has not rallied all that much. It's carrying too much of a burden (deficits, future obligations) to make headway. It is setting up your scenario of higher rates and falling dollar.

I see that J. Hussman took about half his profits off the table on his miner shares last week. He hit those March 10 lows at the same time I was calling the reversal. (Still kicking myself for not taking on a FULL load then. Ah well. I'm learning.What was that about the first eighth and the last eighth?)

EVERY fundamental is favoring gold now. Slowing economy, topping (toppy) dollar, central bank diversification, trade wars, fund buying, inflation picture, ending seasonality, etc. The fact that gold did NOT decline during its seasonal period but basically went sideways says gold is VERY strong here. EXCEPT FOR SUPPORT, RESISTANCE AND TRENDLINES YOU CAN THROW TECHNICAL ANALYSIS OUT THE WINDOW HERE I THINK.

While we're on China
http://today.reuters.com/business/newsArticle.aspx?type=bankingFinancial&storyID=nSHA136507
"China Merchants' credit card issuances hit record"
Hmm, I hope we don't start paying 18% interest rates :-I, though it will be a huge business, I sure hope it doesn't make us as deep in debt as Americans($9K CC debt per person) or British(4K pounds CC debt per person)

Fidelity 'bumped' their Select Funds with hefty dividends Friday 4/7 including Gold/Silver along with Gas/Oil. Many plow their dividends back into fund shares. I would think this will push volume in these areas today.

To Academia:
Here's my hypothesis(more of a guess) on seasonal effects.
When I was reading "Trade your way to financial fveedom" I believe it was the 5th chapter, where different strategies were discussed by traders other than Van Tharp.
In the cyclical section, I saw an interesting 15 year chart that showed interest rates usually peaking in April and hitting lows in October. My own theory for this is that Tax-day is on April 15th, which causes lots of money to be locked up(and Congress goes on vacation) Which causes interest rates to shoot upwards due to a shortage of money
After October sets in, Congress starts their meetings and starts spending, so money supply is increased as the tax dollars flow back into the economy.
Due to intermarket relationships, and lag times, seasonal effects occur(i.e. many stock market bottoms occuring after October, due to bonds trending higher in October and stocks follow after a short lag period)
This is a very rough outlay of my hypothesis(Perhaps we could compare with fiscal year start and end dates in Japan/Britain and their "seasonal effects"). Comments would be welcomed.

Academia-

Seasons are a factor worth being aware of. As Bill doesn't discuss them much I am just pointing them out here for other readers.

Like using charts to try and predict the future course of prices... it may or may not have fundamental drivers. But enough people are aware of it that it does have influence on the outcome. FirstConsul points out some fundamental reasoning above.

Over the years I have grown to respect various seasonal factors... sell in May; October volatility; end of year tax selling in December; January effect in small caps; 4 year cycle... to name a few. So paying attention to seasonal factors now that the data and charts are available makes sense to me.

Perhaps because I am involved in agriculture I am more aware of the importance of the seasons AND their limitations on predicting outcomes. The seasonals are a factor to be considered, but to trade on them alone would be a gamble.

JMHO