To ring in 2025, TradeSmith is celebrating our firm’s biggest innovation since TradeStops with our Breakthrough 2025 event. ***Click here to learn more and give our newest software a free test drive.***
Cracking the Code of the Market’s Annual Cycles BY LUIS HERNANDEZ, EDITOR IN CHIEF, TRADESMITH The idea of trading based on cycles may seem strange. But the truth is that humans have always been fascinated by cycles… and find them everywhere. Observations of cycles in the natural world led humans to develop calendars and clocks. Tracking seasonal cycles led humans to find optimal times to farm and hunt. But when it comes to the history of our fascination with cycles, few examples capture the imagination like Stonehenge. 
This prehistoric English structure is one of the most famous monuments on the planet. One enduring theory for Stonehenge’s purpose comes from the observations made centuries ago. The structure’s entrance faces the rising sun on the day of the summer solstice. This observation led scientists and historians to conclude that it was likely used to track celestial events and predict seasonal changes that were critical to survival 5,000 years ago. The builders of this structure must have made observations over decades, with no equipment, to be able to build this structure as a seasonal indicator. Humans built this structure to help them understand seasonal patterns, and those patterns were critical to growing strong crops, weathering harsh winters, and making the most of the time they had to survive and thrive. Today, we don’t need to build huge structures to detect patterns that can help us thrive. We have more information at our disposal and a lot more analytical power to help us put it all together. At TradeSmith, we’re obsessed with data and analysis about the market and that has led us to uncover one the most critical patterns yet – the seasonality that drives the movements of stocks across the market each year. Laying the Stones: Data-Driven Market Seasonality Investors often hear lore about market cycles that have developed over decades. Just think about the Santa Claus Rally, the January Effect, and the advice to “sell in May and go away.” Market history tells us September brings declines and flash-crashes, while November through April are the best six months for profits from the S&P 500 each year. Those are all examples of “seasonality” in the stock market: recurring periods of growth or weakness that happen with such astonishing frequency that they’ve become expected, annual events. But we’ve discovered that seasonality doesn’t just apply to the big indexes. Every stock has its own “seasons” to grow or decline. A kind of summer… And a kind of winter, too. Year after year. Tesla (TSLA) provides a good example. This high-flying tech stock boasts some of the highest volatility among the “Magnificent 7” mega-caps. But for all the money won – and lost – on TSLA over the last few years, there’s one certainty… Between May 22 and July 1, you want to bet on the electric car maker. TSLA has shot up an average of 17.97% during that summer period, with gains 100% of the time since its IPO in 2010: 
That’s a full 14 years of summertime price spikes, starting long before it fell under the pandemic-era spotlight. And in 2024, the pattern held true: TSLA rose just over 16% during that five-week period. The chart you’re seeing above is one of the latest advancements from TradeSmith’s team of data-driven researchers: the brand-new Trade Cycles Seasonality tool. Expertly crafted by our development team of 74 people, who were put to the task of finding the seasonality trends of each stock, index, commodity, and currency in our monitoring system, we’ve created an easy-to-use tool that can select an asset, analyze its movements, and point out its strongest seasonality trends… with starting periods narrowed down to the day. Here’s another example of a strong seasonality pattern on Walgreens (WBA): 
Over the last 15 years, between Oct. 7 and Dec. 16, Walgreens stock has risen 93.3% of the time, with an average return of 9.2%. And here in 2024, it actually did even better in a much shorter period of time – jumping from $8.61 on Oct. 7 to highs of $10.74 on Oct. 16. A nearly 25% gain in just eight. A Powerful New System for Seasonal Profits Tesla and Walgreens are just two examples. Our team has delicately tuned this tool to uncover seasonality cycles in stocks, indexes, even currencies and commodities. By crunching the data and compiling the historical movements of thousands of different assets and running 50,000 tests per day to analyze every single stock in the major indexes, we’ve built a new system to help predict the biggest jumps on 5,000 stocks, through bull or bear markets. In backtests, the system’s trades have won with 83% accuracy. As we backtested this strategy, we realized that trading these stocks at their very best times of year wasn’t just a novel approach; it was an incredibly effective one. Over our 18-year backtest, these seasonal trades delivered 857% in total growth. That’s more than twice what the S&P delivered over the same period! Even the worst year in our backtest – 2007 – saw an average trade of 2.5% and an annualized return of 37.9%. Far better than the S&P 500 will earn you in any year (but especially in 2007!) 
The question now is… how can you make it work for you? Let me show you… The Power of Seasonality: Now in Your Hands Right now, you can click here to register for free access to TradeSmith’s new Seasonality tool. You can explore the results of our powerful research for yourself until Jan. 8. Then, this Wednesday, Jan. 8, 2025 at 10 a.m. Eastern during our Breakthrough 2025 webinar, TradeSmith CEO Keith Kaplan will show you how this Seasonality tool can help you determine the best time to buy and sell a stock… down to the very day. And with the new year hot on our heels, a new batch of these seasonal cycles is about to kick off… New subscribers will receive unfiltered access to the Seasonality tool and the top 50 best seasonal recommendations this year as part of our Trade Cycles elite trading research service. Go here now to register for the event – and give TradeSmith’s Seasonality tool a try, free of charge, before the webinar. I hope to see you there! All the best, Luis Hernandez
Editor in Chief, TradeSmith | 
0 Response to "Cracking the Code of the Market’s Annual Cycles"
Post a Comment