Memorial Day and Summer Seasonality Cheat Sheets
Subtle Seasonals and Loud Macro
Memorial Day brings a longer weekend, barbecue, beer, among other of the finer things in life, such as seasonality charts. The example below show’s D.R Horton with a 100% hit rate over this time window of May 22nd to July. I do think a few of the homebuilders look compelling here, especially if rates top out, even if only short term.
The seasonality window here points to a strong Thursday, which we had, and then next week often being on the weaker side of things. The window from Memorial Day to Labor Day is often quite bullish. I like the idea of fading any positive opens on Tuesday.
The other piece to consider is the overall seasonality of the market at this stage. Typically in Mid Term years we start to see the market stall out around these levels into weakness during Q3. However, Trump has surrounded himself with market wizards and in combination with a strong earnings season, the market continues to push up.
From a month by month basis, divided into halves, you can see some nice patterns emerge for the rest of the year but this data is not specific for Mid Term Year’s so would recommend saving this cheat sheet as it comes in handy regardless of where we are in any Presidential Cycle. The 1st half of June is often bullish where the 2nd half can be weaker. July to end of September typically some weakness. Keep this in mind.
Volatility has been declining and this is normal going into Memorial Day Weekend. The VIX historically drifts lower into Memorial Day, sometimes hitting multi-week lows as traders front-run declining realized volatility — making long premium plays expensive heading into the holiday. The broader "Sell in May and Go Away" dynamic also fits here: November–April still meaningfully outperforms the summer window even when Memorial Day–Labor Day is net positive
With all this said, I like to trade the volatility during Mid Term Year’s and then be positioned for the winning setup of buying around the end of October-Early November window with a incredible average forward return of >36% over 12 months. This has such a strong success rate it has often been a good strategy for my own portfolio. Hope you all have a great Memorial Weekend, cheers!
