How 2025 Rewrites the Year-End Rulebook

By Lucas Downey, Editor, TradeSmith Alpha Signals

Remember a few months ago when tariffs were sure to derail the global order of trade forever… sending the economy into a dramatic tailspin?

Yeah, me too.

And when stocks crashed right after Liberation Day, the bears had their day in the sun.

Now, just four months later, it’s seeming more and more like the panic was overblown.

Stocks are at all-time highs. The U.S. GDP just got revised higher, and the mainstream media fear machine is scrambling for a new narrative.

Kudos to you if you stuck it out. Chances are, you’re sitting on healthy gains from the Liberation Day selloff.

Looking at the market scoreboard as of Friday afternoon, you may be surprised that the S&P 500 is up 9.8% for the year.

That’s right, we’re looking at above-average gains even with the major springtime disruption.

You may be wondering if this strong momentum has staying power…

I’m here to tell you, based on history – there’s reason to expect bigger-than-normal gains into year-end.

That’s bad news for the bears… and great news for investors!

Today we’ll unpack an evidence-based signal study on why big gains through August spells good fortune for the last four months of the year.

And as a bonus, I’ll offer up one discretionary stock that’s forecast to gain 14% in the months ahead.

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This August Signal Suggests a Strong Year-End Rally

No doubt about it, stocks have bobbed and weaved in August.

The S&P 500 kicked off the summertime blues with a 1.6% decline on Aug. 1.

As it stands now, the index is up 2.6% for the month.

Even more impressive is the 9.8% gain YTD through August:

This may not seem like a big deal, but it is.

Given the S&P 500 averages a 10% gain per year going back decades, I went back to see how common a 9%+ gain in the first 8 months of the year is.

Turns out, since 1980, a 9% or more gain for the S&P 500 from January to August has occurred 18 times.

Not only is it larger than the average typical gain of 6.6%… but it also forecasts market-beating gains over the months to follow.

Check this out.

Whenever the S&P 500 gains 9% or more in the months of January through August, September through December averages a gain of 4.9%… much larger than the average 3.8% we see in the typical year.

Below on the left I have 2025’s gains compared to the average. On the right you’ll see how this momentum carries over into year-end:

But let’s not stop here. It’s not just the S&P 500 that’s cruising.

The NASDAQ 100 has put in a great year-to-date performance too, rising 11.4%.

Now let’s compare this to history.

If we go back to 1986, we find that a 11.4% YTD gain through August is a bit lighter than the overall average of 11.7%.

In fact, NDX has jumped 11% or more through the first eight months of the year 23 times.

Here’s why it’s an important August signal…

Whenever the NASDAQ 100 gains 11% or more in the month of January through August, the following September through December gains 8.3%.

This is much larger than the overall average September-December average expected gains of 5.8%:

Like the S&P 500, you don’t want to fade the tech-heavy leadership, either.

With this favorable backdrop, let’s zero in on an under-the-radar stock to play for upside.

Ralph Lauren (RL)’s Seasonal September Tailwind

Iconic clothier Ralph Lauren (RL) is a seasonal winner into year-end.

I’m sure you’re familiar with the iconic jockey symbol found all over Polo shirts. It’s a luxury lifestyle brand that’s been in business for over 50 years.

This is a company firing on all cylinders with a forecast of nearly $7.5 billion for the fiscal year ending March 2026.

Additionally, analysts are expecting $918 million in net income, with Ralph Lauren highlighting healthy net margins of 12%.

The stock has trounced major index returns in 2025 with 28% gains:

These gains prove how the broadening rally is gaining steam. Discretionary stocks have been on fire lately.

But we should expect further upside in RL due to strong seasonality tailwinds that begin now.

Using TradeSmith’s Seasonality tool, I was able to locate Sept. 4-Dec. 3 as a strong time to own RL:

Diving into the details, we can see that over the past 15 years, this three-month window has amounted to an average gain of 14.5% with an accuracy rate of 93%:

Yes, this polo horse has room to run!

But let’s do one final checkup to seal the deal.

Most of you know that I rely on the Quantum Edge system to rank and score stocks. It’s a powerful engine that instantly scores a company on technicals and fundamentals.

Few stocks can hold top honors… but Ralph Lauren ranks well into the green zone with an ultra-healthy 87.8 Quantum Score.

This is backed by a fundamental score of 77 and technical score of 95.4.

Like in school, the higher the score, the better. RL is a top choice based on this rating:

Let’s wrap this all up.

2025 has been a strong year through August… which signals market-beating gains into year end.

We know that other areas of the market are booming outside of the Mag 7.

Consider saddling up with Ralph Lauren as seasonal strength kicks into high gear now.

Summer is coming to a close. Have a data-driven process to outperform into year end.

How 2025 Rewrites the Year-End Rulebook