The Market’s Seasonal Peak Looms Large

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BY KEITH KAPLAN
CEO, TRADESMITH

It was the first Big Short.

In the summer of 1929, Jesse Livermore – the most famous trader of his day – quietly reversed course.

After riding the roaring bull market for the previous year, he sensed the turn.

The headlines were still euphoric. Stocks were shattering records and pulling people from all walks of life into the stock market.

But experience had taught Livermore that it’s better to sell early into strength than get caught in the downdraft.

So, as the crowd piled in, he sold all his stocks – and began preparing to short the market (bet on stocks falling).

From his private “war room” in the Heckscher Building on Fifth Avenue, he began building bearish positions in overextended stocks. To keep things quiet, he changed brokers constantly, used more than 100 accounts, and even tracked his trades with secret chalkboard symbols no one else could decipher.

His preparations paid off… spectacularly.

By the time Black Tuesday hit, on Oct. 29, he’d made $100 million – $1.7 billion in today’s money. This made him one of the richest men in the world.

And it all came down to one simple truth: Markets move in cycles. Not just boom and bust cycles, but also seasonal cycles that repeat year after year.

Some seasons reward risk. Others punish it. The key isn’t constant action – it’s knowing when to act.

“There’s a time to go long. A time to go short. And a time to go fishing,” Livermore said.

And he meant it.

During slow stretches – especially in summer – Livermore would disappear to his yacht off Montauk and fish for swordfish.

Jesse Livermore aboard the Anita Venetian with his catch. (Source: The Trend Follower)

The hard part, of course, is timing these seasons.

Livermore used his instinct and his experience as one of the world’s greatest traders.

My team of top data scientists and computer programmers set out to solve the same problem by running 50,000 tests a day across 33 years of stock market history.

Our Seasonality tool analyzes all that data to pinpoint the calendar dates when stocks – even entire indexes – tend to turn.

We’ve found stocks that hit their seasonal inflection points with 83% back tested accuracy.

And right now, the data is pointing to something big.

On July 30, our system is predicting a major shift in the stock market.

Not a crash, like in 1929. But it’s the kind of bearish seasonal pattern Livermore would have watched closely – even if from the deck of his boat.

July 30 is this coming Wednesday. So, if you haven’t already prepared for it, now is the time.

And if you need some help, I recommend watching this special online event we aired this past week.

It shows you how to profit by embracing a “rapid-fire” new type of investing that exploits these seasonal weaknesses.

All the details are right here, including two free trade ideas – one bullish, one bearish.

But for today, let’s go through the latest seasonality chart for the S&P 500.

It’s critical you understand the shift coming up at the end of the month.

Here’s the seasonality chart below for the past 32 years of the SPDR S&P 500 ETF (SPY), going back to when the market ETF launched. Green shaded areas represent times when the index has gone up 80% of the time (or more) during those 32 years.

As you can see, it’s been prime time for the S&P 500 since mid-April. Going back to when the SPY ETF launched 32 years ago, it’s traded positive 81.2% of the time from April 16 to June 30 for an average return of 2.6%.

The June 28 to July 28 window has produced gains in 2024 and 2023… fell a lot in 2022… and was on a six-year win streak before that.

We’ve seen some big wins during this period, too. In 2014, 2023 and 2024, this seasonal window delivered a gain of more than 5%. In 2020, it gained more than 10%.

July has a positive but weaker seasonal pattern. In that same timespan, July has been up 65.6% of the time for an average return of 1.2%. This month, we’ve clearly beaten that: SPY is up 2.9% since the start of July, as of this writing.

But we’re coming on a seasonally bearish period for stocks. Let’s bump the timeframe up to the seasonal peak on July 30 and lasting through the seasonal trough on Oct. 9.

On more than half of the past 32 years, the S&P 500 has traded lower through this period. Not much lower, to be clear. But, on average, the benchmark treads water for the next two full months:

Interestingly, big gains in this window – like in 2010, 2018, and 2020 – have often set the stage for downside at this time during the following year, such as 2011, 2019, and 2021. 2024 was a good year, too.

This coming market shift isn’t a reason to panic.

Really, it looks more like a cooling off period after the roaring gains of the last few months.

So I’m NOT recommending you step away from the market entirely.

Instead, you should consider finding those rare stocks that DO have a strong tendency to go up during this period.

Salesforce (CRM) is one example. That stock has gone up 80% of the time between Aug. 22 and Sept. 21 for the past 15 years, for an average return of 4.7% – earning it our “Optimal” classification.

CRM might be a great stock to look at, especially as it’s slated to trade lower from now until then.

This kind of thing is exactly what our seasonality event from last Tuesday is all about.

And also as part of the event, we discussed how you can pair these seasonal signals with the options market to amplify your returns many-fold.

Here are some the gains our current seasonality subscribers have been able to rack up…

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

No wonder it’s been such a huge hit with the subscribers who have joined us this week, and those who first tried it out when we unveiled it in January.

In fact, it was one of the most successful launches we’ve had at TradeSmith in our 20-year history.

To learn why this tool is so powerful, and so critical to understand before the seasonal peak hits next week, click here to watch the full presentation.

We’re taking this down in the next few days, so don’t put it off. Click here now and check out what we’ve been working on, including the two free ideas to thank you for watching.

The Market’s Seasonal Peak Looms Large

The Market’s Seasonal Peak Looms Large

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