Seasonal trading theories are a dime a dozen.

• The first half of the year tends to bring better returns that the second half.
• Dow Jones Industrial Average stocks whose price was beaten down in the previous year have a tendency to outperform the rest of the DJIA in the following year.
• There’s even the theory that markets in the northern and southern hemispheres predictably succumb to the winter blues, or Seasonal Affective Disorder.
• There’s the January Effect — that expected time of year when tax conscious investors sell stocks to write off losses against capital gains.  The “tax sell-off” would depress stock values lower until buyers came back in early January.
• There’s the “Sell in May and go away” idea that hasn’t worked so well.

While seasonality may sound like an oddball way to make money, it works.

In fact, one of our favorite seasonal catalysts is summer.

For example, at the end of every summer, stocks such as Six Flags Entertainment (NYSE:SIX) have a historical tendency to run higher around August of each year.

• In 2015, SIX ran from $38 to $50.
• In 2016, SIX ran from $44 to $60.
• In 2017, SIX ran from $50 to $72.50.

Even in 2018, the stock showed signs of moving higher in August, too.

Or, look at Expedia Inc. (NASDAQ:EXPE).  Since 2016, the stock has a historical tendency to move higher around February of each year before pulling back in the latter parts of the year.

• In 2015, EXPE ran from $85 to $130
• In 2016, EXPE ran from $90 to $130
• In 2017, EXPE ran from $119 to $160
• So far in 2018, EXPE has run from $100 to $133

And of course, who can forget about the summer driving season catalyst?

As families hit the road for summer vacation, we typically see a rally in oil stocks, such as Exxon Mobil (NYSE:XOM) and Chevron (CVX).

To trade summer seasonality, all we want to do is find a basket of stocks that has a historical tendency to run on the summer catalyst.  Then, we sell as historical moves dictate.  For example, with EXPE we know to exit the trade around October of each year because that’s when the stock begins to fall apart before moving higher again.