Here's an interesting short-term pattern that has been working so far this year: All but one time this year that the market has moved three or four days in a row in the same direction, the move has halted and the market has moved in the opposite direction for one to four days.

That pattern held true again last week. After being up three days in a row the previous week, including a 197-point gain by the Dow a week ago Friday, the market was down sharply on Monday of last week, with the Dow losing 241 points. Then it was up three days in a row Tuesday through Thursday, including a 212-point rally on Thursday, only to be back to the downside Friday.

So far this year the market has experienced four days in a row in the same direction only five times, twice to the upside, three times to the downside. Each time the market reversed to the opposite direction for the next one to three days.

As noted, only once has it moved more than four days in a row in the same direction. That was back in January when it was to the downside for five days in a row, its longest stretch in one direction for the year so far. Sure enough, the Dow was back up a big 407 points over the next two days.

I don't know how much longer the pattern will hold, but it might be well to keep it in mind until it does change, particularly when moving into the market on the long side. That is, if you wanted to buy, it has been wise not to do so when the market has been up three days in a row, better to wait until it has been down at least a couple of days in a row. (The natural tendency is to do just the opposite, to feel increasingly left behind and anxious to jump in after the market has been up three or four days in a row).

A long-time pattern that has been quite noticeable this year is the tendency for the week before options expirations weeks to be negative, the week of the expirations to be positive, and then for the week after the expirations to be down again.

Interesting patterns.

However, the time is approaching to be sure you're aware of the most important and consistent pattern of at least the last 60 years. That is the market's annual seasonal pattern, the tendency for the market to make most of its gains in the fall and winter months, and suffer most of its corrections in the summer months.

That seasonal pattern was noticeable even under the old-time Wall Street maxim "Sell in May and Go Away". It showed that, because of the frequency of significant corrections in the "unfavorable season," over the long-term an investor in the market only for the six-month period from November 1 to May 1 matched the performance of an investor invested for the entire year. A "seasonal investor" also avoided 50% of market risk over the years, by virtue of being safely on the sidelines earning interest on cash for six months out of every twelve.

But obviously the market does not begin to rally exactly on November 1 each year. Nor does it top out exactly on May 1 each year.

So in 1998, after much research and development, my firm, Asset Management Research Corp., developed our Seasonal Timing Strategy to better identify the entry and exit points for the market's annual "favorable season."

That research made the important discovery that rather than being a six month in–six month out seasonal pattern, the seasons vary year to year from four to seven months depending on conditions. So the strategy uses a momentum-reversal indicator in conjunction with the calendar, to indicate when the favorable season has begun and ended. In back-testing over a 50-year period, it more than doubled the total return of the Dow and S&P 500. More importantly, in real time since 1999 (which has included five years of bull market and four years of bear market), it has performed even more impressively. It has more than tripled the total return of the S&P 500, with no down years, even during the serious 2000-2002 bear market. We use the strategy for one of the portfolios in my newsletter. But investors need not subscribe just for that strategy. They can follow the strategy's simple rules on their own.

Regarding this pattern, its entry signal can come as early as mid-October. That is now only a month and a half away. The annual seasonal pattern is likely to again be the most important guide of the year for investors. For instance, the S&P 500 is down 12% since the seasonal strategy's exit signal on May 8. Its entry signal is likely to be just as timely. It's not too early to become familiar with how and why it works.