Seasonality refers to particular time frames when stocks/sectors/indices are subjected to and influenced by recurring tendencies that produce patterns that are apparent in the investment valuation. Tendencies can range from weather events (temperature in winter vs. summer, probability of inclement conditions, etc.) to calendar events (quarterly reporting expectations, announcements, etc.). The key is that the tendency is recurring and provides a sustainable probability of performing in a manner consistent to previous results.
Identified below are the periods of seasonal strength for each market segment, as identified by Brooke Thackray. Each bar will indicate a buy and sell date based upon the optimal holding period for each market sector/index.
Entry and exit points provided by Thackray’s Investor’s Guide.
A seasonality study preferably uses at least 10 years of data. Most of our studies use 10-20 years of data, however, data may not always be available for periods greater than 10 years in length. Studies using less than ten years of data can be used, but they tend to be less reliable. Results of shorter term studies have a higher chance of being skewed by a single data point.