Exclusive Pre-Launch Look: Our New Seasonality Tool
By Michael Salvatore, Editor, TradeSmith Daily
It was about six minutes into my one and only job interview with TradeSmith CEO Keith Kaplan.
The jitters were gone. We were just two guys talking shop about the wonderful business we both get to wake up and be a part of every day.
And Keith was about to tell me something that would confirm TradeSmith was the place I had to be.
I already knew how TradeSmith sets itself apart. We're not just a subscription newsletter business, as most in this space are. We're also a robust trading software company with tools that rival everyone, up to and including multibillion-dollar hedge funds.
But what blew me away in this first conversation with Keith was that, despite being around for 18 years, TradeSmith clearly had all the grit and drive of a startup in how it innovates and stays ahead of the competition.
Keith told me about the company's software feature roadmap.
Folks, if I could tell you the entirety of what our analysts and programmers have in store for you, I would. But I can't because:
We'd be here all day, and
These tools range from being in very early alpha, to being proverbial scribblings on a whiteboard that may never come to fruition.
The roadmap is more than 1,300 items long, and growing as fresh ideas come in.
But one item, currently available only for TradeSmith employees, has me so excited that I couldn't help but share it with you today. (Not even our esteemed Platinum-level subscribers have access to this yet. Though, as always, they'll get their hands on it as soon as we're convinced it's of high enough quality.)
Today I'd like to share with you what I found in the new Seasonality tool, which will one day soon be part of our Trade Cycles membership…
A.I. is taking over Wall Street! Goldman Sachs, J.P. Morgan, and Bank of America are pouring vast resources into A.I. And TradeSmith is keeping pace with An-E. This cutting-edge A.I. predicts prices on over 3,000 stocks — 30 days in the future — with jaw-dropping precision, nailing predictions sometimes within seven cents!
But don't take our word for it. TradeSmith's John Jagerson put An-E to the ultimate test on Wall Street.
As you know, I've been following bitcoin quite closely lately. It's surged to a new local high and — while currently overbought on the Relative Strength Index — looks ripe for another move higher.
At first, I couldn't fully explain where this bullishness came from. There was a natural intuitiveness to it. Something told me, "Bitcoin's time is coming again."
But the data quickly confirmed it. We're six months away from the next bitcoin halving. As I explained some weeks ago, these periods have historically predated monster bitcoin gains.
But what about where we sit today?
This is where the Seasonality tool comes in.
This tool, still very much in progress, charts the historical likelihood of financial assets like stocks and crypto to go up or down during various periods.
With a new presidential election fast approaching, one of our first test beds for this tool is election-year seasonality. It's able to tell us the historically strong and weak periods for assets in election years, along with the years before, after, and of midterm elections.
All that said, here's what the work-in-progress Seasonality tool shows us about bitcoin as we head toward 2024…
Keep in mind, this is pre-release software. By the time we kick this out the door for some "in the wild" testing, it may look quite different.
But the core idea, and the dataset powering it, are likely not to change. In short, this tool is telling us to be bullish on bitcoin over the next month.
From the selected period highlighted in blue, Nov. 23 (tomorrow) to Dec. 18, bitcoin typically sees some of its most positive price action each pre-election year.
Counting the 2015, 2019, and now 2023 pre-election-years data, bitcoin has moved up an average of 24.6% during the monthlong period starting tomorrow.
We can see from the chart above that this is far from the only seasonally strong period for bitcoin in a pre-election year. From February through April, part of May, June through July, and the end of September to mid-November, bitcoin has historically shown substantial gains. We can also see that you would have wanted to take some profits on bitcoin from early August to September.
I plan to buy some more bitcoin soon to take advantage of this historic tailwind.
And of course, this tool works not just on bitcoin, but every major financial asset tracked by our system.
Here, for example, we can see the periods of highest average returns of the S&P 500 ETF (SPY) for every pre-election year going back to 1995.
We can see that we just exited the most recent bullish seasonal trend, which had an average gain of 5.19%. And the next seasonal bullish trend is coming on Dec. 14. Historically SPY has risen 1.9% during this period, which lasts until Dec. 29.
Election-year data for SPY is a bit choppier, with four seasonally weak periods and five seasonally strong periods, the first one starting in late January for an average return of 1.5%.
Interestingly, the most bullish period for SPY during an election year is just before Election Day and lasts until the first week of December.
As you look at these charts, you can start to see the possibilities form.
You can plug any sector into this tool, and any stock within it, to uncover the times they move the most throughout specific years — and in which direction.
As just one more example, here's how IWM, the Russell 2000 ETF, stacks up during an election year. We can see that its seasonally bullish periods produce higher returns than the large-cap S&P 500 — another tailwind to our notion that small caps should dominate 2024.
Like I said, this is all very pre-release stuff that I'm not 100% sure I'm even allowed to show you.
Call it the carefree spirit of the holidays… But as soon as I started messing with this stuff, I decided to beg forgiveness, not permission, and send some of what I found your way.
I hope this helps you prepare for this final stretch as we head into the new year, and what's sure to be a fascinating 2024 between the recovery in stocks and the presidential election.
Of course, we'll keep you updated here in TradeSmith Daily on when these tools officially release, and how to get your hands on them.
To your health and wealth,
Michael Salvatore Editor, TradeSmith Daily
P.S. One tool you can access right now, and should be core to your experience here at TradeSmith, is TradeStops.
TradeStops is our flagship software tool that should be any investor's first step into our ecosystem.
It's simple to use. It's inexpensive (less than $10 a month). And most importantly, it saves you a ton of headaches and potentially a lot of financial pain no matter where you are in your investing journey.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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