Earnings Spark the Fire, but Seasonality May Fan It
Microsoft’s AI-heavy cloud story and Meta’s ad rebound brought fuel to a market that was starving for good news. And technically, that news hit hard: the S&P 500 blasted through its downtrend and is now eyeing the 50-day moving average, with the 200-day not far behind.
The question now is: How long does this momentum last?
One clue could come from an unexpected place: the calendar.
Memorial Day is coming up Monday, May 26, and seasonality trends around this holiday are surprisingly strong. Looking back 10 years, the S&P 500 tends to gain heading into the long weekend. The sweet spot? Exactly 7 trading days before the holiday. That stretch has been positive in 9 out of the last 10 years. Only one year—just one—finished in the red.
We’re currently 16 trading days out. Historically, that window delivers an average return of +1.38% with 90% accuracy. That’s not just noise. That’s something to work with.
Stacking Seasonal Edge with Stock-Level Patterns
That seasonal bullish bias is nice—but how do you trade it?
Let’s bring in a stock with its own May-to-July edge: Generac Holdings (GNRC). This name tends to ramp right into the teeth of hurricane prep season and early storm headlines. Whether it’s the real reason or just a pattern that keeps repeating, the data shows it works.
Here’s the setup:
- Look at GNRC from May 2nd over the next 28 trading days.
- Over the last decade, it’s only posted one losing stretch during that window—back in 2015.
- The average gain? +9.36%.
That puts a price target around $123.22, based on the current $112.67 price.
The Trade Idea:
- Call Debit Spread: Buy the 20 JUN 115 / 120 call spread for around $2.15.
- If GNRC reaches its seasonal average move, that $5 spread could be worth the full $5.00, turning $2.15 into $5.00.
- That’s a 130% return, assuming the move plays out and the stock closes above $120 at expiration.
As always, adjust your strike width or expiration for your risk profile. You’re not chasing some mystery here—you’re leaning into a repeatable seasonal pattern, stacked on top of a broader index move that’s got real tailwind.
Bottom Line:
The S&P’s breakout might be more than just a relief rally. Seasonals line up. Earnings are strong. And names like GNRC offer ways to layer in some bullish exposure while controlling risk.
Not a trade rec—just a smarter way to think through what’s in front of us.
Summer’s coming. Let’s see if the bulls bring the heat.
Alright! I’m out of here for the week. Hope you had a great week of trading. I’ll be back for another week of trading and to break down what’s going on in the markets. Until then… have a great weekend!
