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# Seasonality
- URL: https://letters-of-a-trend-follower.ghost.io/seasonality/
- Published: 2026-10-02T09:09:37.000Z
- Updated: 2026-10-02T09:09:37.000Z
- Author: Sunsetsession

Ever since I first became interested in investing and trading, I have come across a few market adages that everyone is familiar with. They’ve always been in the back of my mind, but I never took them too seriously. For example:

- **"The September Effect"** refers to the historical tendency of the stock market to be weak during this specific month.
- **"Earnings Season"** points to the specific periods when companies release their quarterly results.

Recently, I came across a video of Dan Zanger discussing how the markets only experience a few strong trending moments each year, while the rest of the time is just consolidation. Then, this September, I heard Mark Minervini echo a similar sentiment, highlighting that September is historically a weak month.

As a trend follower, I am always waiting for those strong momentum phases. This got me thinking: can we somehow identify when these moments have a high probability of occurring?

This is where seasonality comes into play. As a trader, I don't really care *why* these things happen. I just want to know *when* they happen—or when the probabilities shift in our favor—so we can react at the right time.

### The Power of Earnings as a Catalyst

We aren't in the business of predicting, nor do we need to know the underlying 'why'. However, during the April rally, I noticed significantly more earnings reports and earnings-driven breakouts compared to the sluggish price action we are seeing right now in September. In fact, some of my best trades were actually on earnings breakouts.

This makes perfect sense. Earnings reports are the moments companies publish their actual numbers. We get to see how the underlying business is performing regardless of the stock price—sales growth tells us something about forward guidance, margins, etc. This fundamental data can either strengthen the narrative that institutions are buying into, or shatter it entirely. Earnings are definitely a massive catalyst for stock movement.

### My Own Seasonality Research

While there is plenty of existing research on market seasonality, I wanted to conduct a focused study of my own. I took all earnings reports from 2023 through 2025 and compared them against the average weekly performance of the Nasdaq Composite (IXIC) over the last 21 years. I pulled this data using a Python script and the Yahoo Finance API, and then plotted it on a chart.

After spending some time analyzing the chart, I gained a few valuable insights. Most notably, there is a clear correlation between the volume of earnings reports and the average returns of the Nasdaq.

To make the data easier to digest, I color-coded the chart into three zones: **Danger (Red)**, **Opportunity (Green)**, and **Caution (Orange)**.

![](https://storage.ghost.io/c/46/b2/46b298fd-ff07-4390-ad90-f63d88c373d8/content/images/2026/10/Schermafbeelding-2026-10-02-105732.png)

It quickly becomes clear that there are two primary periods each year when opportunity is exceptionally low: **weeks 8 through 10**, and **weeks 36 through 41**. During these windows, the market tends to yield negative returns, and earnings volume is either low or has already peaked.

Conversely, the data shows that high-opportunity environments mostly cluster around four distinct periods. Every time a new 'opportunity' window opens, a wave of companies starts posting earnings, and the broader market begins delivering higher average weekly returns.

### What This Means for Us as Traders

So, how does this actually help us? We aren't here just to sound smart or prove an academic point; we are traders, and we want to make money in the markets.

The most valuable takeaway is this: the market genuinely has seasons where the probability of successfully trading breakouts is significantly higher—or lower—than usual.

This perfectly emphasizes the importance of the **'M' (Market Direction)** in CANSLIM. If your trades aren't working and you see the market going flat or down in September, don't beat yourself up over it—it happens constantly during that time of year. On the flip side, make sure you are on your A-game when the opportunity windows are about to open, because that is when the market is most likely to start trending.

Of course, don't take this too literally. You must remain flexible. This research and the resulting chart are far from perfect, but they provide a solid framework for understanding the importance of earnings season and its correlation with market returns.

Ultimately, price and volume are king, and no two years in the market are ever exactly the same.

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**Disclaimer:** *The content of this blog is for educational and informational purposes only and does not constitute financial advice. The author is not a certified financial advisor. All analysis is based on historical market data and technical methodologies. Trading stocks and cryptocurrencies involves significant risk. Always do your own due diligence and consult with a professional financial advisor before making investment decisions.*

If you want to discuss trading and other related things, I'll be happy to talk. Discord username: **@sunsetsession\_60476**