Find Buy Opportunities When Bearish Seasonality Turns Bullish

Plus, gold mining stocks are set for a year-end rally. [Inside TradeSmith logo] [Inside TradeSmith logo] September 24, 2024 Find Buy Opportunities When Bearish Seasonality Turns Bullish To everything there is a season, so goes the old adage. And that couldn’t be truer for the financial markets. Our own TradeSmith Trade Cycles tools illustrate the shifting market seasonality in living color. Right now, the stock market is right in the middle of a seasonally bearish period, but the good news is any pullback we see in stocks should be over by late October. Then, investors can look forward to the beginning of a strong seasonal year-end rally phase to close out this election year. With that in mind, now is a good time to be looking for good buying opportunities on the other side of any stock market weakness. , I’ve shared a few ideas with you on the sectors and investment styles that are leading the market at this stage in the cycle – and there’s a good chance this group of sectors continues to lead on the other side of a pullback. Another intriguing area that could be a good seasonal buying opportunity is precious metal stocks - specifically the Van Eck Gold Miners ETF (GDX). Gold has been a leading asset class this year in terms of performance. Everyone’s favorite yellow metal is up 28% year-to-date, recently surpassing prices of $2,600 an ounce - and it’s easy to see why gold has a newfound luster. When the Federal Reserve cuts interest rates, the U.S. dollar tends to experience some weakness, which is typically good for gold and other commodities. Plus, if the Fed cuts rates too far too fast, it has the potential to rekindle inflation - another positive for the yellow metal. It’s a good time to be a gold bug. Taking a look at our Seasonality tools, I see a promising trading setup for gold mining stocks as seasonal trends shift from negative to positive in the months ahead. First up, let’s examine the weak seasonal period just ahead of us: PLEASE NOTE: You can access the Seasonality features with a subscription to Trade Cycles or TradeSmith Platinum. If you don’t see this option in your TradeSmith Finance platform – and would like to – call 888-623-0858 to discuss. According to TradeSmith’s Seasonality tool, GDX declines about two-thirds of the time between mid-September and mid-December – with an average decline of 5.76%. But that sets up a terrific buying opportunity for GDX from year-end into January, as seasonality turns bullish again. From Dec. 16 to Dec. 31, GDX rallies roughly 4%, with an accuracy rate of 83%. Here’s how the start of the year looks for GDX, according to our: As you can see, our Seasonality indicators show GDX primed to rally further: The ETF posts gains of 8.29% on average between Jan. 1 and April 12 – with 77.78% odds. That makes for a possible gain of 12.6% total, if you were to hold GDX from the December seasonal low through April 12, 2025! Perhaps the easiest way to take advantage of this positive seasonality is by buying shares of GDX - gifting your portfolio a diversified basket of 53 leading gold mining stocks in a single trade. But let’s take it one step further – and run a more detailed analysis on the component stocks that make up this ETF. We can check GDX’s components directly from the TradeSmith Finance Stock Analyzer: To check the ETF’s components, simply pull up the ticker symbol GDX in the Stock Analyzer. Next, click on the Holdings tab to display a list of the stocks that make up the full ETF. By default, this tab allows you to track the health of each component, along with its weighting, market value, volatility, and pricing information. But if you’d like to examine these components more closely, we’ll need to take this list of stocks and plug them into our TradeSmith Screener. You’ll notice an export icon at top right of the Holdings list (highlighted above). You can click on that icon to export the entire list of GDX’s component stocks into an Excel spreadsheet. For our next step, you’ll want to save just the ticker symbols in this spreadsheet. These are displayed in the very first column of your spreadsheet – you can delete all the other data. Then, go ahead and save this file in a convenient location, perhaps on your desktop - and remember to save it in the .CSV file format. Now you’re ready to turn this list of stocks into a new TradeSmith Finance portfolio or watchlist with the help of the Portfolio Import tool. To import your new list of stocks, simply navigate to My Portfolios from your TradeSmith Finance dashboard, then click on the Manage tab in the submenu. To build our GDX component screener, click Watch Only, then on +Add Portfolio: Next, create the new watchlist by clicking on the Upload CSV File button. To import your saved file, select the blue “click here to upload file” link, and then navigate to the .CSV file we saved earlier. Find it in your browser and double click to upload it. Your file name should be displayed in the blue box. Finally, click on Import & Preview. That will bring you to this view: In the dropdown box at top, scroll down to Symbol* to identify the imported data as ticker symbols. NOTE: If an error message pops up on your screen at this point, it just means some of the tickers aren’t recognized in our system. This mainly happens with stocks listed outside the U.S. With GDX, a few of the component tickers include stocks listed in Hong Kong. Simply scroll down the list and uncheck any tickers that are highlighted with a red box. Once you’ve finished, click Next at the bottom of the list, and you’ll see a new prompt: “Where would you like to import these new positions?” Enter a name for your new portfolio and click on Finish and Import Data to import your list of tickers into a scannable portfolio. Alternatively, you can also choose to add the new tickers to one of your existing portfolios. Now that you have a watchlist saved that includes all the stocks in GDX, you can build a TradeSmith screener for further analysis. To access the Screener tool, simply click on Invest from your TradeSmith Finance dashboard, and select the Screener tab on the submenu to +Create a new screener. Here’s the screener I put together to help narrow down the list of GDX stocks: We’re focused on finding seasonal buying opportunities in gold mining stocks. So, we start by clicking on + Manage Filters and adding the filter for Portfolios & Watchlist. Next, I select my saved watchlist “GDX,” which contains the 53 stocks in the ETF. Also, I want to focus on only those stocks with the best potential upside seasonal patterns by adding the following Seasonal filters: - Pattern Accuracy more than 80% and with an Average Return more than 5%, - and Seasonality Years Under Review = All Years. Finally, add the filter Days to Seasonality Pattern Start Date, and set it to between 60 and 240 days. That’s roughly covers the period starting from December and moving into the first quarter of 2025. That’s the sweet spot for GDX seasonality, so it makes sense to find individual mining stocks with seasonality that matches up. Click the green Run Screener button to finish. I sorted my results by my personal favorite quality/valuation metric Free Cash Flow Yield DESC(descending) to get the highest yielding stocks at the top. I got 25 results – and here are the top 15 below: Simply click on the highlighted icons in the Seasonality column to see each stock’s upcoming seasonal patterns in detail. Two stocks that stand out from this list are Osisko Gold (OR) with a +7.28% seasonal pattern in the back half of December, plus a +8.11% pattern from March – April 2025. Even better is the Australian-listed, Bellevue Gold (BGL.AX), which has three distinct seasonal patterns stacked together: All three seasonal patterns have a 100% hit rate according to our Seasonality tools — and by adding up the individual average returns, you have the potential for a 41.8% total gain from Nov. 25 – June 2, 2025. Mike Burnick’s Bottom Line: Keep in mind, you can perform this type of detailed seasonal research on any of your saved portfolios or watchlists. You can also create your own custom watchlist using the stock holdings of any ETF in our database. Plus, you can customize your own screener by adding your favorite filters for a more focused list of results for deeper analysis. There’s virtually no limit to what you can accomplish with . And if you find any appealing stocks you’d like to add to your portfolio, you can set alerts and protective stops on them from your My Portfolios page. Good investing, [Mike Burnick signature] [Mike Burnick signature] Mike Burnick Senior Analyst, TradeSmith P.S. Gold is a fantastic asset to keep on your watchlist, especially when the markets are experiencing a period of bearish seasonality. But it’s also a great example of how tracking seasonality can boost your portfolio’s performance. Some assets, like gold or natural gas, trade according to observable patterns – revealing tendencies to rise or fall at specific times of year. Whether you’re trading gold right now, or looking at a specific stock or index for an entry later this year, leveraging these seasonal trends can give you an edge – if you can identify them ahead of time. That’s where William McCanless, TradeSmith’s top Trade Cycles analyst, comes in. He’s developed a unique swing trading system based on our Seasonality tools that’s generated an impressive 459% annualized gain over just one year. William believes in keeping things simple: Anyone can follow his system, including those with relatively small trading accounts. And he’s excited to share the details with anyone willing to learn. In his no-fluff, straight-to-the-point demonstration, William will walk you through the exact steps that helped him achieve those impressive results. He’ll guide you step by step through his process, teaching you how he uses TradeSmith tools to take seasonal data and turn it into actionable trades – trades that have consistently produced average gains of 13.6% per trade, every 27 days. If you’re interested in swing trading not just gold mining stocks, but a wide range of stocks, indexes, commodities, and currencies — whether markets are rising or falling — you won’t want to miss this. You can watch William’s demo – and learn more about his Trade Cycles System – [HERE](. © 2024 TradeSmith, LLC. All Rights Reserved. P.O. Box 340087 Tampa, FL 33694 To unsubscribe or change your email preferences, please [click here](. [Terms of use]( | [Privacy Policy](