The Truth About Stock Market Seasonality: Structure Leads, News Follows

The Truth About Stock Market Seasonality: Structure Leads, News Follows

We’re now five months into 2025, and the market's performance has been modest — SPY is up +0.87% YTD and QQQ +1.69% YTD. Meanwhile, leveraged ETF holders have experienced losses due to the March/April correction. But here’s the distinction: those following Steve’s cycle signals saw a major divergence — TQQQ strategy is up +54.75% YTD, while buy-and-hold is still negative.

This contrast reveals why structure — not headlines — matters most. While news creates motion, it’s structure that determines direction. That’s why we wait for alignment: a rising composite line, cycle lows, and crossover signals that confirm a bottom. News-based rallies can trap traders. Structure-based trades ride sustainable momentum.

Seasonality Can Help — But Only With Structure

From April to July, SPY has historically delivered strong returns, averaging a cumulative +3.9% over 25 years. April and July are particularly strong months, while May is mixed and June often underperforms.

But this stock market seasonality is only useful when it aligns with structure. Right now, long-term cycles are rising, and an intermediate cycle upturn may soon follow. If both line up, we can expect a more meaningful rally in late June. Until then, it’s not just about what seasonality suggests — it’s about what structure confirms.

This month’s action is already showing that nuance. Instead of a sharp drop, markets are grinding sideways — a sign that the dip is part of a larger uptrend, not a breakdown. That’s why we prepare with buy stops above resistance levels: we wait for the structure to turn before we act. Check our post on The Smarter Leveraged ETF Strategy: Why We Wait for Cycle Confirmation for more info.

How Retail Traders Misuse Seasonality

Many retail traders approach seasonality as a shortcut — assuming that historical averages will play out exactly the same every year. They might blindly enter the market just because it’s “July,” without checking whether the broader structure supports a move up. This often leads to premature entries or holding through drawdowns that could have been avoided.

Steve’s approach is the antidote to this reactive mindset. Seasonality is a context, not a catalyst. If the market’s underlying structure doesn’t align — if cycles are turning down or crossovers aren’t confirmed — then seasonal strength can be a trap, not an opportunity.

Case Study: When Seasonality Failed Without Structure

Consider September 2020. Historically a weak month, yet traders rushed in after a strong August close. The cycles were already declining, but some traders clung to the hope that recent strength would persist. What followed was a quick correction that caught many off guard.

Had structure been the guide — composite cycles turning down, price stalling at resistance, and crossover signals warning of weakening momentum — many of those losses could’ve been avoided. Seasonality didn’t fail. Traders failed to use it properly.

Avoiding FOMO During Seasonal Setups

Seasonal trends invite optimism — and FOMO. Traders often jump in just because “June is usually good” or because a short-term bounce occurs. But Steve’s philosophy is about patience. Without crossover confirmation or support from rising cycles, jumping in can turn a seasonally strong period into a personal drawdown.

We don’t anticipate turns. We confirm them. That means:

• Ignoring weak bounces during a declining cycle

• Placing conditional orders only above key levels

• Acting on discipline, not on seasonal bias

In short, seasonality is a tool — not a signal. It must work hand-in-hand with the broader cycle roadmap.

The Role of Composite Cycles in Seasonal Context

Composite cycles blend short, intermediate, and long-term views into one cohesive model. They allow traders to see the prevailing structure beneath the surface — and determine whether seasonal tendencies are actually actionable.

Right now, for example, the long-term cycle is rising, but we’ve been in a short intermediate pullback. When both turn up together, seasonality becomes more trustworthy. But when composite cycles and seasonality diverge, the cycles take priority. This framework protects us from chasing misleading patterns and helps us align entries with real momentum.

Structure Always Leads Seasonality

The real benefit of studying seasonality is knowing when it aligns with structure. When both cycle models and seasonal patterns point up, the odds of success rise. But when they diverge, structure wins.

Right now, we’re watching for a shift: a shallow pullback during a rising cycle phase. That’s bullish — but not tradable until confirmed. We don’t try to catch the exact bottom. We let the market prove itself first. That’s the rhythm we follow.

People Ask This About Stock Market Seasonality

How reliable is stock market seasonality?

Seasonality can be a helpful guide, but it isn’t a guarantee. It reflects historical patterns, not current market dynamics. Its power increases when paired with structure — cycles, momentum, and price action. Used alone, it can lead to mistimed trades. But when the rhythm of the market aligns with seasonal trends, probabilities improve dramatically. Seasonality works best as a supplementary tool — one that helps sharpen timing but never replaces structural confirmation.

What are the strongest months for the stock market?

Historically, April and July tend to be strong months for the S&P 500, often delivering average gains over +1.5%. November and December are also strong due to year-end flows and institutional window dressing. June and September, by contrast, have tended to underperform. Still, it’s crucial to match these tendencies with structural support from the current cycle, such as upward crossovers or positive channel momentum. Without that alignment, even the best seasonal month can misfire.

Is seasonality enough to base a trading strategy on?

No. While tempting, seasonality is not a complete system. Without confirming structure — like price behavior at support, crossover alignment, or visualized cycles — seasonal trends are prone to false starts. Many traders learn this the hard way by entering at a seasonally favorable time only to face unexpected volatility. A disciplined trader uses seasonality as context, not as a signal. It helps frame opportunities but must be confirmed with structural evidence before acting.

How do Steve’s models incorporate seasonality?

Steve doesn’t use seasonality as a primary driver. His focus is on cycle timing, crossover signals, and price channels. However, when seasonal trends align with his composite models, they act as an added tailwind. If both cycle direction and seasonal strength point higher, trades have higher odds of success. But if seasonality and structure diverge, structure takes priority every time. It’s not about prediction — it’s about confirmation.

Can seasonality help with leveraged ETF timing?

Yes, but only with confirmation. Leveraged ETFs like TQQQ and SPXL can deliver outsized gains — but also large losses. The key is entering only when cycles are bottoming, crossovers confirm, and trend direction supports the trade. When seasonality also aligns, it becomes a high-probability window. But timing is critical — acting early or late can magnify losses. That’s why structure must always be the gatekeeper for leveraged ETF trades.

Resolution to the Problem

Relying solely on seasonal patterns — or on headlines like tariff delays — creates false confidence. Traders may feel validated by a bounce, but if it lacks structural backing, that confidence fades fast.

The solution is simple but disciplined: wait for structure. Cycle models projected weakness into early June — and that weakness is still unfolding. We watch for signs of base-building, crossovers, and long-cycle turns. Only then do we act. Structure leads. Seasonality assists. That’s how we protect capital and position for real upside.

Join Market Turning Points

At Market Turning Points, we teach traders how to follow structure — not hype. Every day, we provide updated cycle charts, crossover signals, and strategic insights based on rhythm, not reaction. It’s how we avoided the March/April pain — and how we caught the massive 54% YTD gain in TQQQ using disciplined strategy.

If you want to follow real market timing — not guesswork — join us at www.stockforecasttoday.com.

Conclusion

Seasonality is helpful — but only when it aligns with structure. This June is a great example: a traditionally weak month that may become a launchpad for the next cycle leg higher — if structure confirms it.

Don’t chase. Don’t assume. Let the market show its hand. That’s how structure leads — and how smart traders follow.

Author, Steve Swanson