Trade Cycles: A Revolutionary Trading Tool that Identifies Seasonal Trends

TradeSmith's Trade Cycles tool has identified strong seasonal trends in the stock market. The tool has been successful in pinpointing when seasonal forces are strongest, leading to significant gains in the three stocks recommended in January: Cloudflare Inc., DraftKings Inc., and Cheniere Energy Inc. As we enter the third quarter, the tool has suggested two new seasonal recommendations: Carter's Inc. and Target Corp. Despite their typical summertime pop, neither Trade Cycles nor the author recommends a purchase in either stock.

As the third quarter approaches, investors are looking to TradeSmith's Trade Cycles tool for insights into seasonal trends in the stock market. The tool has historically proven successful in identifying strong seasonal forces, leading to significant gains in the three stocks recommended in January: Cloudflare Inc., DraftKings Inc., and Cheniere Energy Inc. However, as we enter the summer months, the tool suggests caution for two new seasonal recommendations: Carter's Inc. and Target Corp. Despite their typical summertime performance, neither stock is recommended for purchase at this time.

The Trade Cycles tool has identified strong seasonal trends that can influence stock performance. In January, it recommended Cloudflare Inc. (NASDAQ:NET), DraftKings Inc. (NASDAQ:DKNG), and Cheniere Energy Inc. (LNG), which have seen significant gains. However, as we approach the third quarter, the tool suggests a cautious approach for Carter's Inc. (CMA) and Target Corp. (TGT).

Carter's Inc. and Target Corp. have historically shown strong performance during the summer months. However, the Trade Cycles tool indicates that the current market conditions may not be favorable for these stocks. Analysts suggest that the market's complacency regarding trade policy, including tariffs, may be masking vulnerabilities [1].

Michelle Zatlyn, President and Board Co-Chair at Cloudflare Inc., sold a significant portion of her shares recently, totaling approximately $14.4 million [2]. This sale comes as Cloudflare's stock trades near its 52-week high, delivering an impressive 137% return over the past year. Despite this, the company's market capitalization now stands at $66.2 billion, reflecting the strong demand for its platform.

The market's steady upward climb may be masking vulnerabilities, according to analysts. The US stock market is now trading at a roughly 2% premium to its fair value, compounding tariff-related risks [1]. Analysts warn that stretched valuations could lead to a lack of margin of safety, increasing the risk of a downturn if tariff negotiations go awry or earnings guidance disappoints.

In contrast, TradeSmith's Trade Cycles tool suggests a cautious approach for Carter's Inc. and Target Corp. The tool's analysis indicates that the current market conditions may not be favorable for these stocks, despite their historical summer performance. Investors should remain vigilant and consider the potential risks associated with tariffs and stretched valuations.

References:
[1] https://www.morningstar.com/markets/headline-fatigue-does-stock-market-care-about-tariffs-anymore
[2] https://www.investing.com/news/insider-trading-news/cloudflare-net-president-zatlyn-sells-144m-in-stock-93CH-4140893