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Seasonality is basically a technical signal generator with an essentially fundamental background. It can be characterized as a blend of both price and calendar elements. In a statistical sense, the calendar aspect delivers added benefit because as an external factor it is independent of standard indicators. It is similar with intermarket analysis or fundamental analysis. This added benefit is seasonality's main advantage (it does not correlate with other indicators).
External signal generators do not have a virtual automatic loss-limiting function with individual signals, as is the case with trend following methods, which means for example that stop loss orders should be used. The disadvantages of seasonality include the fact that individual years can vary, that seasonality itself can change and that random events (e.g. extreme years) can look like seasonal patterns. It must be kept in mind that seasonality as such does not exist in one market; rather only individual seasonal patterns exist.
A seasonal pattern is an identified trading opportunity with above-average profit that recurs almost every calendar year.
There are a number of possible reasons for the emergence of seasonal patterns – for example weather-based patterns such as harvest periods or the heating season, the timing of interest payments (e.g. at year-end or semi-annual payments), investor sentiment during certain times of the year (e.g. in the autumn), annual or quarterly financial reporting periods for companies (which can also be associated with temporary repatriation of capital) or investment funds, tax payment deadlines, periods of regular fund inflows, inventory cycles, etc.
Seasonal patterns that are based on sound statistics and a discernible cause are considered to be stable and have a high chance of repeating in the future.
Why do stock indices rise at the turn of the year, while falling in August and September? Isn’t that just coincidence? Questions such as this arise whenever seasonality is studied for the first time. Because only if the stock market’s past movements were seasonally based and not coincidental, can seasonality then be considered a useable forecasting instrument.
In fact there are reasons behind seasonal trends. Stock funds try to improve year-end results by pushing stock prices higher. Other reasons include interest payments in December, because year-end bond coupon payments flow partially into the stock market. The holiday effect (christmas, year-end) also plays a role. Moods are generally positive and many investors use the time-off to make investment decisions. These factors influence the course of prices and lead to seasonal patterns, which investors can utilise.
Each part of the year has a unique reason for its seasonal tendency, for example the rally in autumn or the market strength at the beginning of the year. Additionally, every market has its unique reasons for seasonal behaviour. For instance, changes in interest rate policy play little role in the agricultural markets whereas harvest time does. But just as we cannot always identify the reasons for a price move, we also cannot always know the actual reasons behind seasonal patterns. The reasons most often attributed to seasonal trends are among others:
Payments in specific seasons (i.e., at the end of the year)
Sentiment at certain times of the year (holidays, christmas, sporting events)
Aberrations in financial reporting (i.e., investment funds’ financial statements)
Seasonal charts show the average course of past years. If there is an extreme move during the year, such as the crash of 1987, then it clearly influences the seasonal chart more than a "normal" year would. In addition, there can be similar moves during the same part of the year occurring for a couple of years in a row that have no true seasonal basis. For example, company news released coincidentally at the same time of year over a number of years. This can lead to patterns appearing in a seasonal chart that do not have a seasonal nature.
Seasonality, like any statistical method of analysing the financial markets, is only based on historical data. A seasonal pattern such as the fall rally is ascertained by analysing a large number of years. But not every year is the same. In some years the rally is strongly pronounced, in other years weaker, and in a third year the market falls. Only after analysing a number of years does a seasonal pattern emerge.
But because there are other factors influencing price development such as fundamental, psychological and political factors, the course of individual years is different and sometimes completely contrary to the seasonal trend. Even with a pattern as statistically grounded as the fall rally there are always going to be years that are complete exceptions.
Because of its calendared nature, seasonality is really an intermediate-term signal generator. Nevertheless, it can also be used for short-term trading because the primary trend also influences the profitability of short term signals. Long-term oriented investors can also utilize seasonality, namely for fine tuning entry (for example by shifting the planned buying of a stock from August to the more favorable November time frame).
Seasonax is a tool that helps traders to identify and evaluate the seasonal patterns of any instrument in order to boost returns.
The application is available from any device and is based on Dimitri Speck’s unique seasonality algorithms. It provides investors with sound statistical support for their investment and trading decisions.
Unlike a standard price chart, a seasonal chart shows the average trend of the past several years. The time axis is scaled in months, the vertical axis shows the relative value change compared with 100. The end-value of each chart shows the average trend development over the corresponding years. Our charts offer to-the-day displays and exact percentage values.
Seasonax offers two different approaches to identify seasonal patterns.
Open the instrument of your choice and use the results of our pattern finder.
Use the Seasonality-Screener. The screener is a tool which identifies seasonal patterns within whole markets such as the S&P 500 or Commodities.
By using our function to detrend charts
, we use statistical methods to separate trend from time. This means that the over-arching uptrend will be subtracted out which is especially useful for "high flyer" stocks that show a constant uptrend in the past years.
Thereafter you will immediately and quite clearly discern in what time periods the relatively weak phases are located. This way, it is easier to analyze and identify cyclical patterns.
Seasonal price trends are shown by averaging the price movements of previous years. The mathematical operations performed by our unique algorithm deliver precise results.
Our web application does not offer intraday data. However, as a Bloomberg Professional or Refinitiv EIKON user, you have access to intraday data within our Seasonax integration in their eco systems.
Bloomberg Professional Terminal: Type "APP SEASONS GO"
Thomson Reuters / Refinitiv EIKON: Look for "Seasonax" in the app library.
Both our integrations offer a free trial version, so do not hesitate to start a risk free trial.
As of now, all calculation is based on long trades. However, you can still use Seasonax to identify opportunities for short trades. Learn here how to trade both market directions with the help of seasonality.
We are using end-of-day adjusted close prices. This means that stock splits and dividend adjustments are considered.
Most seasonality apps have very limited tools. Their output is often imprecise or even downright inaccurate. Seasonax is based on algorithms that generate precise seasonal charts and accurate return calculations. A number of important problems associated with seasonality were solved by these algorithms for the first time.
The Seasonax tools help users to identify trading opportunities and can help them to save a great deal of time they might otherwise need to spend on other forms of research.
Every new Seasonax subscription starts with a free trial of 3 days (exactly 72 hours). Within this period, you have full access to all features and data of your chosen subscription. After these 3 days, the subscription will automatically convert to a paid subscription and the your credit card will always be charged in advance before a billing period (monthly, quaterly, annually) starts. That's why we need to collect your payment details in advance.
If you decide to cancel your subscription within the free trial period, your credit card will not be charged and the subscription will automatically be terminated at the end of the trial. No questions asked, it is totally risk free.
The Seasonax Free version is available to all registered users without any cost. It comes with full historical data for around 20 popular instruments to demonstrate the powerful feature set of our product. The same 20 instruments offer unlimited historical data in the Light version as well (just to make it fair for Light subscribers). All other instruments only offer 10 years of historical data for Light subscribers.
The Business subscription offers a lot more markets to screen with the
Seasonality Screener. Furthermore it comes with a comparison feature to either compare the seasonal trend of an instrument with a specific year or with another instrument (e.g. with its benchmark).
Business subscribers are also able to upload their own custom data to analyze.
Learn more about the Seasonax features
You can switch at any time and the product change happens immediately. Please note that there is no trial period if you already have a subscription. Unused (already paid) time from you former subscription will be considered on your next invoice and reduces the amount.
You can cancel your subscription at any time. But please note that your subscription will only be terminated at the end of the already paid billing period.
E.g. If you have an annual subscription and you want to cancel it 3 months before it gets renewed, the subscription will stay active until the end of the (already paid) billing period. If you accidentally forgot to cancel your subscription and want to do so right after the renewal, please reach out to our support team so that we can find a solution.
You can manage your subscription (create, up-/downgrade, cancel) at https://app.seasonax.com/subscription.
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No. The Seasonality Screener is an integral part of your Seasonax Full or Business subscription. However, it is not available to registered users without any paid subscription or to Light subscribers.
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