August 2025 DDD

Today’s number is… 3
That’s 3 months of typical chop in post-election years — August through October.
Here’s the chart:

Let’s break down what the chart shows:

• The blue line tracks the average S&P 500 path during post-election years from 1950 to 2021.
• The red line shows the actual S&P 500 performance in 2025 through July 30.
• A red dashed box highlights the seasonal chop zone from August to October in the historical composite.

The Takeaway: This is where the seasonal script says markets get choppy.
In post-election years, the August–October stretch has historically been flat at best, and volatile at worst. That pause often clears the runway for a strong year-end finish.

But 2025 has already broken from that pattern. After a shaky Q1, the S&P 500 has surged steadily higher — with tight price action and broad participation.
It skipped the summer stall — and just kept climbing. That’s not bearish behavior.

Still, this seasonal stretch matters.

Not as a primary signal — but as context.

I treat seasonality like second-tier data. It’s never the reason I act. But I do pay attention when it lines up with other factors.
Right now, it doesn’t.

The trend is strong. Momentum supports it. Price shows no stress.

But if weakness does show up in the weeks ahead, it wouldn’t be a surprise.

That would just be a textbook pause.

The question is: does the market respect that playbook… or tear it up again?

Either way, how the market behaves in this window could shape the final stretch into year-end.

I wish I knew why, but August is a month that tends to have a lot of out-of-the-blue scary events pop up and with that comes a good deal of market volatility. Who could forget last August? Stocks fell more than 1% on the first Thursday and Friday of the month, and then on Sunday, August 4, we went to sleep knowing that Japan was crashing (having its worst day since the Crash of 1987) and US futures were down huge as well. That Monday saw the VIX spike to 50 and stocks fell 3% for one of the worst days in years.

After more selling into the middle of the week and incredible amounts of fear, stocks bottomed that Wednesday and actually finished up on the month. Still, if you were there you remember how frightening it was, and sure enough it happened in August.

Something About August​

Going back to 1990 when Iraq invaded Kuwait, August is notorious for big events and market weakness. 1997 had the Asian Contagion, 1998 the Russian Default, and 2010 the European Banking Crisis. The next year saw the first US debt downgrade and a near bear market in just a few days. 2015 had the first 1,000 Dow point drop ever after the surprise Chinese yuan devaluation. Then in 2022 Jerome Powell surprised markets in August by turning quite hawkish at the annual Jackson Hole Economic Symposium. All of these times saw big drops, proving once again there is something about August.

By no means are we saying this bull market is over. It isn’t. But after a 28% rally off the April lows, we’d suggest being open to some potential volatility this August, as this is a month known for it.

Since 1950, August is the third worst month on average and in a post-election year only February is worse. No, we don’t suggest ever investing purely on seasonality, but it is important to have a plan and we’d say planning for some August turbulence is the way to go.

Another reason to buckle up? August hasn’t been higher under a second term President in a post-election year back to when Eisenhower was in office, down six times in a row.

There Is Good News​

Let’s be clear, we still expect stocks to be higher by year-end than they are now. But that doesn’t mean we won’t have a few scary moments this August, so start preparing for them now. Why are we optimistic? Earnings are hitting record levels and profit margins are hitting new cycle highs. We’ve talked about these two things for years now and called them the dual tailwinds to this bull market and the good news is nothing has changed. If there is some August weakness use it as an opportunity not to panic.

Thanks so much for reading and I hope you have a great weekend. For more of my thoughts on August, I was honored to join Frank Holland on CNBC bright and early this morning. You can watch the full interview here.

• Is the market strong during a seasonally weak period?
• Is the market weak during a seasonally strong period?
• Are you asking the right questions about seasonality?

Here at Trendlabs, we focus on analyzing the behavior of the markets, and therefore we must also analyze the behavior of market participants – the humans.

We’re always looking for divergences between what people are thinking and what the market is actually doing.

One of the ways to analyze human behavior is by observing changes in activities, wardrobe, and the company we keep throughout the year.

For example, in the summer we go to the beach, we wear less clothing, and we hang out with our neighbors more.

In the winter, we don’t go to the beach at all. We go to the mountains, and we probably spend more time indoors. We spend more time with family over the holidays, and we wear heavier clothing.

It’s just different. The weather is different, the days get longer and shorter, our moods change.

There are so many differences throughout the year – and if you think these behavior changes don’t impact our decision-making in the market, I’m afraid you probably don’t understand humans.

Of course seasonality affects our buying and selling decisions in the market.

Besides, we’ve quantified it, and we can actually see exactly how our environment, weather patterns, the people we hang out with, the clothes we wear and the places we go generate ups and downs in markets.

S&P 500 Seasonality​

This bar chart shows the annual seasonal pattern for the S&P 500 going back every year since 1950:

As you can see, the market’s seasonally strong period is coming to an end this month and a historically weaker few months are ahead of us.

Look at the annual returns for August and September.

This is the worst two-month period for the stock market throughout the year, as it prepares for that year-end ripper beginning at some point in October.

“Buy in October and get yourself sober,” is how I learned it from my friend Jeff Hirsch, the editor of the Stock Trader’s Almanac.

But I want to make something perfectly clear: Seasonality is not something we generally want to position for ahead of time.

In other words, just because the market is supposed to be strong, from a seasonal standpoint, doesn’t mean we blindly buy stocks.

Same thing to the downside. Just because we’re entering a seasonally weak period doesn’t mean we blindly sell our stocks.

In my experience, the value of seasonality is in looking at the market after the fact and asking, “Did the market ignore these seasonal trends, or did the market acknowledge them and act accordingly?”

When stocks are strong during a seasonally weak period, that’s evidence of underlying strength in the market.

When stocks are weak during a seasonally strong market, that’s evidence of underlying structural problems in the market.

We saw that at the end of 2007 heading into 2008. Stocks were supposed to be strong, but they were already rolling over… into the Global Financial Crisis/Great Recession.

On the upside, I remember 2016 well, before Donald Trump got elected the first time, stocks were stronger than they should have been historically.

And the S&P 500 went on to have one of the greatest and least-volatile years ever in 2017.

Post-Election Years​

Here’s a chart showing only the average post-election year market performance going back to 1950.

This one is taking the four-year cycle and looking at every year following a presidential election:

The blue line is the average year, and the red line is the current year to date.

Notice the upcoming decline in the seasonal average:

Cycle Composite for 2025​

Some of our predecessors over the years – particularly Jeff Hirsch and the Stock Trader’s Almanac and Ned Davis of Ned Davis Research, two of the best who ever did it – have inspired a good trick.

What we’re doing here is combining three cycles – the annual cycle (going back every year since 1950) and the Election Cycle (every post-election year since 1950) as well as the Decennial Cycle (taking the fifth year of every decade since 1950).

This is a composite look at all three of the major cycles, including the Decennial Cycle:

Notice how the S&P Cycle Composite also shows the S&P 500 entering what is historically a weaker period for the market.

Seasonality is something that I’ve seen get misused a lot, and it’s often misunderstood.

We don’t literally “sell in May and go away,” as you’ll hear some people suggest.

That’s not how this works.

We want to follow the seasonal trends, and when the market ignores these trends we want to pay more attention.

Is the market strong during a seasonally weak period? That’s a bullish sign.

Is the market weak during a seasonally strong period? That’s a bearish sign.

Most people don’t think about it this way.

And they’re all wrong.

Let’s stay focused and do this right.

Stay sharp,

Friday, August 1st, 2025

Buoyed by Trump’s Russia threats and news of Indian state refiners curbing purchases of Russian crude, crude oil futures have been trending above $70 per barrel throughout the week, settling on Friday slightly below the $71 mark. Towards the end of the week, sentiment has been sapped by expectations of yet another OPEC+ production hike, potentially even as high as 548,000 b/d, as the eight output-cutting countries aim to get rid of voluntary quota commitments.

US Slaps New Sanctions on Chinese Ports. The US State Department stated it would impose sanctions on 20 entities it suspects of trading Iranian oil and petrochemical products, including the Chinese oil terminal Zhoushan Jinrun, the fourth port facility in China to be directly targeted by the US.

Indian State-Owned Refiners Stop Russian Imports. India’s state-controlled refiners have stopped buying Russian oil as discounts narrowed to just -$1 per barrel to Dubai, further disincentivized by Donald Trump’s announced 25% tariff on India if the country continues its purchases of Russian crude.

Saudi Budget Deficits Shrinks on Higher Oil. Buoyed by higher crude oil production on the heels of OPEC+ unwinding, Saudi Arabia’s budget deficit shrank to $9.2 billion in Q2 2025, a 40% decline compared to the previous quarter, putting the kingdom’s public debt at 370 billion.

Trump Endorses Chevron’s Venezuela Return. Confirming rumours from a week ago, the Trump administration has reportedly granted a sanctions waiver to US oil major Chevron (NYSE:CVX), allowing it to resume operations in Venezuela on the condition that no money reaches the Venezuelan state.

China’s Polysilicon Industry Launches Its Own Revamp. Top Chinese producers of polysilicon, a key component of solar panels, are reportedly negotiating a $7 billion plan to purchase and shut down a third of the country’s production capacity, equivalent to 1 million tonnes per year, eyeing an industry revamp.

LNG Canada Runs into Problems. Shell’s (LON:SHEL) $40 billion LNG Canada is undergoing technical issues that halved its liquefaction capacity, with problems reported at the Kitimat plant’s gas turbine and refrigerant production unit, prompting at least one LNG tanker to divert away from the facility.

Egypt’s Favourite Oil Majors Expand Their Presence. Seeking to kick-start rapidly depleting offshore gas fields, Egypt’s state oil company EGPC signed a joint exploration deal with European oil majors ENI (BIT:ENI) and BP (NYSE:BP) to appraise the El Temsah block to the east of Chevron’s Nargis discovery.

New Zealand Wants to Drill for Oil Again. The government of New Zealand has liftedits 2018 ban on offshore drilling introduced by the Ardern government back in the day, with crude production in the country gradually declining over the past years due to lack of investments, to just 17,000 b/d.

Power Outage Saps Freeport LNG Output. The US’ Freeport LNG terminal has been running at 50% of its capacity after a power outage had put the entire plant offline on Wednesday, representing a 1.1 BCf per day loss for feedgas demand in the country as it reported seven outage events in July alone.

Europe Mulls Pooling LNG Purchases from US. The European Commission suggested pooling LNG buying demand from European companies to ramp up imports of US-origin LNG in line with Brussels’ $250 billion energy import commitment, seeking to create some negotiating leverage with US suppliers.

Copper TACO Clears Chicago Premium. In a perfect example of a TACO trade, US copper futures plunged by 22% on Wednesday after the Trump administration exempted copper ores, concentrates and cathodes from its oft-hailed 50% copper import tariff, sending COMEX futures down to $9,650/mt.

US Refiner Gets Slapped with Giant Penalty. US downstream giant Phillips 66 (NYSESX) was mandated to pay $800 million in damages to biofuels producer Propel Fuels for stealing trade secrets under the guise of gathering due diligence for a potential acquisition, according to a California state court ruling.

Egypt Eyes FSRU Start Next Week. Egypt’s government announced that flows from its recently deployed LNG regasification vessel Energos Eskimo are expected to start next week, seeking to further ramp up LNG imports after taking in an all-time high of 1 million tonnes last month, doubling June imports.

So it is the jobs reports that are the issue.

Jobs represent 2 very negative inputs:

1. Jobs go down, US debt to GDP goes up and it will go up very quickly and significantly; and

2. Passive flows into stocks from paychecks ends and even reverses. The US 401K’s now represent emergency savings.

So really there is nothing more important to watch than the employment situation. Of course the numbers presented are false and manipulated. So when the numbers turn south, they are really bad.

Where do you want to be?

Gold.

BTC is a Ponzi scheme.

jog on
duc