Investing 101

TOGGLE’s seasonality indicator shows you the performance for the upcoming month or quarter, based on the performance in the same period for the last 5 years.

This indicator is relevant across asset classes, and used for example to predict movements in very seasonal commodities such as soybeans. 

Equities tend to show seasonal patterns too, for a series of reasons. The earnings season provides a recurrent driver to the market. And regular events like quarterly and year-end rebalancing further fuel regularities in price patterns.

Investors can use seasonal patterns to gauge price movements in a specific period of time, based on an asset’s historical performance. However, one should be aware of the broader environment as seasonal factors can become less relevant in the presence of large economic shocks or big market trends. 

For example looking at the S&P 500, taking into account 5 years of historical data, seasonality suggests that the index could fall 5% over the next month. 

![1m seasonality](https://storage.googleapis.com/toggle-webcm-prod/https://storage.googleapis.com/toggle-webcm-prod/Screenshot_2024_02_15_at_9_23_00_AM_abf6208945/Screenshot_2024_02_15_at_9_23_00_AM_abf6208945.png)

A measure of seasonality is the AAII Investor Sentiment Survey, which has been reported every week since 1987. 

The survey is used to showcase the mood of individual investors - with weekly results published in Barron’s, Bloomberg, and widely followed by market strategists. 

AAII Members are asked: what direction do you think the stock market will be in the next 6 months? 

![AAII investor sentiment survey ](https://storage.googleapis.com/toggle-webcm-prod/https://storage.googleapis.com/toggle-webcm-prod/Screen_Shot_2022_04_01_at_11_24_11_AM_ee700d2958/Screen_Shot_2022_04_01_at_11_24_11_AM_ee700d2958.png)

A bearish AAII Sentiment indicator is a good gauge of the overall market sentiment - is consensus getting too bearish, exposing investors to a possible positive surprise? On the other hand, a bullish AAII Sentiment indicator is a good gauge of the overall market sentiment - is consensus getting too bullish, exposing investors to a possible negative surprise?

_WhatIF: Earnings helps traders make sense of, and take action during earnings season. "What if..." is the question investors are always asking themselves. "What if oil drops from here?" or "What if the Fed surprises at the next meeting?" or "What if Microsoft beats earnings?"_

_This app educates investors and helps them understand what is going on in markets – before and after announcements. WhatIF is free and available to all traders at toggle.ai/earnings, the App Store, and the Play Store._

![WhatIF: Earnings app](https://storage.googleapis.com/toggle-webcm-prod/https://storage.googleapis.com/toggle-webcm-prod/Responsive_Rect_600x314_af330a6dc7/Responsive_Rect_600x314_af330a6dc7.png)

This indicator is based on the assumption that security prices go through predictable changes within the same period of every year: a quarter, month, holiday period, peak period.

Seasonality Indicator

Technical Indicators 

Momentum is a synonymous with performance. It measures the percentage change in a stock price over a certain period of time. For example: “S&P 500 fell **10%** this week”

Momentum is a highly significant measure for market participants. It helps gauge the size of a move, and provides psychological benchmarks. For example, when the market falls 20% it is considered to be in a “bear market”.

Momentum is used to gauge entry points and the strength of a trend. Strong price rallies are often seen as a sign of renewed interest in the stock, possibly by investors anticipating good news. On the other hand, big price drops are often seen as a sign of capitulation in the stock, possibly by investors anticipating bad news.

Momentum is the measure of percentage change in price over a certain period of time, from a day to a year or more.

The chart below shows the trailing PE for SPX in the last ~50 years. 

![12M Momentum](https://storage.googleapis.com/toggle-webcm-prod/https://storage.googleapis.com/toggle-webcm-prod/Screen_Shot_2022_03_16_at_3_27_08_PM_99cfc6ee71/Screen_Shot_2022_03_16_at_3_27_08_PM_99cfc6ee71.png)

Momentum is used to gauge whether the market is trending or conversely has reached overextended levels.

For example, TOGGLE observed that whenever Costco’s 1W and 12M momentum turned positive, it historically returned a median increase in price of 13.52% over the following 3M. 

![Costco momentum](https://storage.googleapis.com/toggle-webcm-prod/https://storage.googleapis.com/toggle-webcm-prod/Costco_history_63d601c83b/Costco_history_63d601c83b.png)
