A Brutal “AI Winter” Has Arrived

BY KEITH KAPLAN
CEO, TRADESMITH

If you showed up to my big seasonality event last week, thank you!

You – and the thousands of others who joined me last Tuesday morning – helped make it one of the most successful events in TradeSmith’s 20-year history.

During the event, legendary “quant” investor Louis Navellier and I showed how you can leverage hidden seasonality patterns in the stock market to find the best day to buy – or sell – any stock.

We also warned about a major regime shift in the stock market set to begin this week… potentially even today.

Now, Louis and I don’t have a crystal ball. Nobody does.

Instead, we rely on cold, hard data… and the incredible pattern-predicting power of TradeSmith’s Seasonality tool.

Because we ran tens of thousands of tests a day, drawing on decades of market data, we were able to develop a system that can pinpoint the precise calendar dates when stocks – and even entire stock market indexes – tend to turn.

And after scanning that massive catalog, it showed that the S&P 500 is primed to drop in August. It happens year after year – with scary consistency.

We even saw it happen in years whose market action was a 90%-plus match to2025’s…

This seasonal pattern has happened in bull markets, bear markets, and everything in between.

That means we can expect a regime change for the stock market.

Not a crash, like in 2008… or even a bear market like in 2002… but a bearish seasonal shift you’ll want to be prepared for.

Louis and I got into all the details during our event – but after today (the day before the bearish seasonality period begins), we’re taking it offline.

So, make sure to watch the replay while you still can.

Today, I’ll show you more of how it all works. Then we’ll look at how a “winter” is coming for popular tech stocks.

If you’re heavily exposed to these stocks, expect months of subpar returns ahead.

And if you’re thinking of buying Apple (AAPL), Tesla (TSLA), Nvidia (NVDA) – or any of the other giant AI stocks – history says it’s best off buying until the end of the year.

Stocks Have Their Seasons

As Mark Twain put it, “The future doesn’t repeat, but it sure rhymes.”

This happens over long historical cycles. It also happens every year. We get weekly and monthly trends – year in, year out – no matter what’s happening in the world.

Let me be clear… It takes a lot of data to identify these trends in stocks. But when you see market seasonality in action, it can blow you away.

I was certainly surprised last fall when one of my programmers at TradeSmith emailed me with a simple request: Watch Nvidia’s stock on Oct. 24.

He’d been doing some historical research. It showed that, starting that day, Nvidia had risen an average of 7.8% over the next 15 days. This pattern had occurred 100% of the time over the past 15 years.

I didn’t know of any obvious catalyst for that day. No scheduled company announcement… Fed meetings… product demos. Nothing.

But sure enough, on Oct. 24, Nvidia went up as my programmer had projected. In line with its seasonal pattern, over the next 15 days it rose 5.1%.

Now, I’m a data scientist. So, I sat down with that programmer to discuss the results. And he walked me through the data.

Clear as day, for the past 15 years, Nvidia shot up during that 15-day time span every year.

That stretches back to 2009. Bitcoin had just debuted, and the idea of an AI industry was still in the realm of science fiction.

Back then, Nvidia was known for making graphics cards for video games and media editors. But still, it kept rising in late October, regardless of news or attention… year after year.

Now, a 5.1% gain isn’t much.

But if you could repeat that gain every 15 trading days, using consistent historical patterns like we saw with NVDA, that’s the same as making 130% a year.

It inspired us to develop a system – and a groundbreaking new trading strategy – to do just that.

By combining these signals with the power of options, we’ve shown TradeSmith folks who tried that system the chance to make gains of…

112% on Hasbro (HAS) calls in 10 days
107% on Aon (AON) calls in 23 days
124% on Booking Holdings (BKNG) calls in 15 days
180% on Analog Devices (ADI) calls in 14 days
248% on Intuit (INTU) calls in 15 days

And Nvidia isn’t the only popular tech stock that goes through seasonal shifts like this.

Tech’s Bullish Seasonality Window Is Closing Soon

Take crypto-friendly payments processor Block (XYZ), formerly known as Square.

Between June 27 and July 22, it was in a period of strong bullish seasonality that has delivered profits every year for its 10-year history. And its shares gained 19% over that time this year:

As you can see, there’s no clear seasonal trend for this stock until the start of September… and the next trend coming is bearish. We don’t get another “green day” for Block until the end of October.

Another popular tech stock I’ve been keeping an eye on is Google parent Alphabet (GOOG). It just went through another big seasonality green zone – with a 13% return.

This is the 17th straight year GOOG has gone up from May 24 to July 23.

I expect this stock to cool off over the next few months before rising late Q4.

It’s a similar prospect for the entire tech sector.

This next chart is of the Invesco QQQ ETF (QQQ). It’s packed with America’s biggest tech stocks – including Microsoft (MSFT), Amazon (AMZN), Nvidia, Apple, and Tesla.

And as you can see in this next chart, QQQ just exited a seasonality green zone on July 20 that saw it rise 2.3% – very close to its 2.4% average return.

Its next bullish seasonality window doesn’t get underway until Oct. 24.

But that doesn’t mean there aren’t opportunities to profit as the summer doldrums hit.

Big Gains in Lesser-Known Stocks

As I covered today, our system is signaling a broader bearish turn beginning next week.

But while the S&P 500 and the giant tech stocks in QQQ may struggle, other lesser-known stocks are setting up for big gains.

And our seasonality trading tool allows you to zero in on those bullish opportunities despite a weakening overall market.

Louis and I got into all the details during Tuesday’s event. If you weren’t able to attend, you can check out a free replay right here.

And remember to tread carefully in August. If the seasonal patterns hold, stocks will start to stumble soon.

All the best,

Keith Kaplan signature

Keith Kaplan
CEO, TradeSmith

P.S. Louis has been making models that beat the market since he was a student in the 1970s, back when he was working on mainframe computers the size of a room.

That’s why he’s called the “King of Quants,” and it’s why the New York Times referred to him as an “icon among growth investors.”

Over the years, his data-driven strategies have pinpointed 18 recommendations that returned 10,000% – and 675 others that doubled – including an early Nvidia recommendation in 2019.

And Louis says TradeSmith’s Seasonality tool is “unlike anything I’ve encountered in my 50-year career.”

It’s easier to get a sense of how powerful this tool is when you see it in action. Here’s that link again to watch the replay – and see what this game-changing tool can do.