Do you know what time it is? Are you ready for some football? Always an exciting time of year when the NFL kicks off a new season. Playing high school and college football myself has definitely left an imprint on my brain. It seems that at the start of each fall season I can still smell triple sessions in the air. Icy hot and ice-tub limb soaks were a vital ingredient to mend our aching muscles as our bodies got acclimated to the physical pounding it was to endure over the next 3 months.

Well my football days are over as I hung up my cleats years ago for pursuit of a career in the financial markets. Not much different when you think about it as the market can throw some bone-crushing financial shots as well. Glutton for punishment I guess…As we successfully navigated our way through the markets over the years Steph and I have come up with a few tips that we want to share with you. We always keep track of a few things; the time of year, the hot financial news flooding our in-box and the market mood.

When we look at the time of year and turn to the calendar with the start of football season upon us, it means one thing; the 3rd Quarter is 1/2 complete. Back in April we wrote an article about crucial times of the year in regards to your investments and the overall health of the economy (“Punishing the Bears at Tax Time?“). As a reminder we spoke of the first key date being December 31st. Tracking price action from the closing price on the last trading day of the year gives us a sense if things are doing better or worse than the previous year. We call the first quarter of the year (January to March) “Testing the Waters”. Man, how we yearn to see the heights of the stock market after the first 3 months of the year.

The second key date we spoke of was tax day (April 15th). Since many Americans are procrastinators by nature, they tend to invest last minute in their retirement portfolios on April 15th to take advantage of tax incentives. We call price action in the second quarter (April to June) “The Set-Up”. This is the most important quarter of the year in my opinion because if we see follow through in the direction of the first 3 months (i.e the stock market was going up) we most likely would be sitting pretty. Things were looking great through April but all of a sudden we got into the summer months and saw the “Flash Crash” as the Dow Jones Industrial Average dropped more than 1000 points inside 5 minutes. Yikes!! All the gains of the year wiped clean in a blink. As price action now waffles above and below break-even on the year it leaves me thinking about what can happen the rest of the year.

We call the 3rd Quarter “Moving Day” and its time for a move. We have pessimistic financial news flooding our airwaves lately and its hard to dismiss the negative thoughts. Eight months into the year and the SP 500 went from up near 10% at its height in April to now being down nearly -3% YTD in August. The EUR/USD was down more than 20% during the first 5 months of the year as the US dollar surged only to see half of those losses erased over the last 3 months as the fed continues to broadcast global instability and bad employment data here at home. With interest rates locked nearly as low as they can go the Fed now concerns itself with a double dip recession. After already playing all-in on the lower interest rate hand Bernanke and company now consider buying back treasuries as their next weapon to stave off the negative news.

The pessimistic views out there are sure to bring some wild swings as we approach one of the most volatile months of the year (October). With all of this in mind it brings me to my reality meter or market mood (Yearly High plus Yearly Low)/2 = 50% to give me confidence in direction. If prices are above 50% I am bullish. If price action is below 50% I am bearish. Looking at the entire picture (time of year, the financial news and the market mood) after the wild swings subside we will most likely be right at equilibrium (50% of the yearly range). The 2nd Quarter “Set-up” pushed us back to the mid-point on the year and its likely that’s where we will finish. 1111 is 50% YTD for the SP500 futures and 13228 is 50% YTD on the EUR/USD spot. I am a day trader at heart and adjust daily but if I were to predict where price action will take us over the 4th Quarter (“The Finish”), come December 31st, 2010 it seems a finish at mid-field is likely.

You can’t win, if you don’t play!! Prosperity is at your fingertips! All you have to do is grab it!!

For more RDS articles on trading, visit www.rdstrader.com.