{"id":27167,"date":"2026-05-06T07:30:00","date_gmt":"2026-05-06T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=27167"},"modified":"2026-05-05T15:33:38","modified_gmt":"2026-05-05T19:33:38","slug":"why-seasonality-could-lead-stocks-lower-this-summer","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/why-seasonality-could-lead-stocks-lower-this-summer\/","title":{"rendered":"Why Seasonality Could Lead Stocks Lower This Summer"},"content":{"rendered":"
\n

Managing Editor’s Note:<\/strong>\u202fToday, we’re hearing from our contributing editor Mike Burnick in his weekly feature.  <\/p>\n

Mike has over 30 years in the investment and financial services industry – from operating as a stockbroker, trader, and research analyst, to running a mutual fund as a registered investment advisor and portfolio manager, to being Research Director for the Sovereign Society, specializing in global ETF and options investing.  <\/p>\n

\u202fAnd he’s been senior analyst at TradeSmith for three years, running Constant Cash Flow, Infinite Income Loop,\u202fand Inside TradeSmith.\u202f\u202f  <\/p>\n

Here’s Mike…  <\/p>\n<\/div>\n

Why Seasonality Could Lead Stocks Lower This Summer<\/h2>\n

BY MIKE BURNICK, CONTRIBUTING EDITOR, MARKET MINUTE<\/em><\/strong><\/p>\n

Back in my high school football days it was all about “X’s” and “O’s.”<\/p>\n

Our head coach literally drew up plays on the locker room chalkboard with those letters, expecting us to memorize it.<\/p>\n

But in the investment game, it’s all about “V’s” and “W’s.”<\/p>\n

Because those are the letter-shaped patterns traders frequently see when a stock – or the entire market – makes a bottom.<\/p>\n

At least W bottoms used to be<\/em> a frequent pattern in markets. But in recent years it’s been mostly about “V’s.”<\/p>\n

In fact, most stock market pullbacks since the Covid crash in 2020 have formed a V bottom. That’s when prices plunge straight down, hit a low, then surge straight up again.<\/p>\n\n

\"\"<\/figure>\n\n

The lows in 2025 and again this year were V’s.<\/p>\n

One problem with V-shaped market lows is that you don’t have much time to buy stocks at discounted prices before they rebound.<\/p>\n

A bigger problem is that investors get conditioned to expect<\/em> ALL<\/em> market lows to be V-shaped.<\/p>\n

And while that has<\/em> been the case recently, it is definitely not<\/u><\/em> the norm longer term.<\/p>\n

In fact, going back to the 1950s, most significant market lows look more like W’s. That’s a letter that traders like better.<\/p>\n

In a W-shaped bottom, prices usually strike a low, bounce higher (but short of the old high<\/em>) then retest the initial low. This gives you more time to buy on the second dip that forms the W.<\/p>\n

I bring up this “alphabet soup” of stock patterns because sooner or later, stock selloffs won’t end with a quick V. And you should be well aware of it.<\/p>\n

It’s possible that the recent V bottom in March could morph into something else entirely.<\/p>\n

And according to our TradeSmith Seasonality indicators, that could be a high probability.<\/p>\n\n

\"\"<\/figure>\n\n

Taking a closer look at our Trade Cycles Seasonality chart shown above, you can see that mid-term elections have not been kind to stocks, especially during May through October.<\/p>\n

The S&P 500 is up just over 52% of the time during this period, with a median loss of -3.55%.<\/p>\n

That is most likely due to the typical election year uncertainty. Or perhaps the negative campaigning that takes place in the months leading up to it.<\/p>\n

Either way there is certainly more uncertainty for investors to ponder heading into the 2026 election.<\/p>\n

First, there is the unresolved war with Iran. That pushed oil prices above $100, igniting inflation concerns again.<\/p>\n

The Federal Reserve is reluctant to cut interest rates as a result. And the Fed itself, like Congress, is soon to be in transition with a new Fed chair taking the helm.<\/p>\n

Bottom line<\/em><\/strong>: I hope that you have followed Jeff’s guidance and our TradeSmith tools to help you make money off the March V-shaped low. But now may be a good time to take some profits and tighten your stops. Remember, not all market bottoms are V’s… and mid-term years often include a summertime slump.<\/p>\n\n

Good investing,<\/p>\n

\"Signature\"<\/p>\n

Mike Burnick
\nContributing Editor, Market Minute<\/em><\/p> \n\n\n","protected":false},"excerpt":{"rendered":"

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