Historically, allocators have been most wrong about the midterm cycle when they treat the seasonal pattern as the primary signal rather than a secondary one. The July 2026 consensus has equities at 66% overweight with barely anyone on the other side, which is the configuration for the sweet spot thesis.
What makes this cycle harder than the historical average is that the Fed is leaning toward hikes rather than cuts, and the seasonal lows have historically formed in a policy environment that was becoming more accommodative, not less.
Historically, allocators have been most wrong about the midterm cycle when they treat the seasonal pattern as the primary signal rather than a secondary one. The July 2026 consensus has equities at 66% overweight with barely anyone on the other side, which is the configuration for the sweet spot thesis.
What makes this cycle harder than the historical average is that the Fed is leaning toward hikes rather than cuts, and the seasonal lows have historically formed in a policy environment that was becoming more accommodative, not less.
Agreed. I always use it as a secondary signal. Something that I keep in the back of my mind vs actually trading the pure cycle.
That's how I approach it as well, honestly. The cycle gives you a map, but the Fed decides whether the roads are open. September will tell us a lot.