Seasonal patterns in the stock market are often caused by economic cycles. For example, when the economy is doing well, people spend money on big-ticket items like cars and houses. This boosts demand for stocks that are tied to those purchases. As the economy improves, people start saving again, which causes demand for stocks tied to savings to rise.
BUT, Be Careful.
Looking at a simple seasonal chart is not enough!
You need a backtest and KPIs to see the quality of the seasonal pattern.
The quality of your analysis determines your success.
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The best-known seasonal pattern on the stock market is: "Sell in May and go away, but remember to come back in September!"
Prices rise much more from October to April than from May to September.
Microsoft almost always publishes better results than forecast in Q3.
This creates a stable, recurring pattern with a high hit rate from which you can profit.
YUM! Brands, Inc. is the world's largest operator of quick-service restaurants.
Regularly, the share price rises for three months from the beginning of March.
The hit rate of this seasonal pattern is over 95%. The Sortino Ratio is very high, suggesting a high and consistent performance.
The seasonal chart of Eli Lilly and Company is solid in the last two months of the year.
TFavorable corporate earnings regularly generate price increases.
The positive seasonal pattern can also be found across the healthcare sector.
Recurring, seasonal trends yield the same gains in a few weeks as typical investments do in a year.
You need a backtest to see if the recurring pattern has produced stable profits in each period and what drawdown has occurred.
Other statistical key figures and charts show qualitative monthly, weekly, and weekday performance details.
We show seasonal intraday charts for instruments with high trading volume for optimal buying time.
To use seasonality profitably, you need more than just a seasonality chart.
Our Seasonality Chart Analyzer shows you all the relevant data for your analyses and success.
Use the best seasonal patterns for your success.
All three Seasonality tools are part of the Seasonality Essential subscriber offer.
If you're looking for an investment strategy that will help you beat the market year after year, there's no better place to start than with seasonal investing. Seasonal investing is based on the idea that specific industries do better during certain times of the year. For example, the housing industry performs better in the spring and summer because more people buy homes.
There are many studies where the seasonal effect is well described. You can find a list of studies in the following post: What Is Seasonality? How It Works.
Price developments of stocks, currencies, and commodities result from economic or corporate developments. Economic and corporate developments repeat themselves and automatically generate recurring (seasonal) patterns. There are also weather-related reasons that influence the demand for commodities or products.
There are two main reasons why you should consider seasonal investing. First, it helps you avoid making costly mistakes by avoiding investments that could be performing better. Second, it allows you to make money when others are losing money.
There are many different reasons for the right time to buy and sell. Using seasonal effects is a good choice and has long been established in the financial industry. To identify the right time to buy and sell, you just need the right platform, which will search for the opportunities and allow you to analyze them.
If you're looking to invest in stocks, there's no better time than now. The first three months of each year are the strongest for the stock market. This is because companies typically report earnings during these months, which will help determine whether the company will perform well or poorly.
While the stock market tends to do well in the spring and fall, it tends to do worse in the summer. Why? Because people spend more time outdoors and less time inside watching TV and playing video games. As a result, fewer people buy new products and services, so businesses are making less money.
Seasonality can improve the timing of their investment and trading activities. Analyze strong recurring trends and find the best opportunities with our Seasonality Screener.
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