July tends to offer bullish tailwinds for equity markets, with the Nasdaq 100 and S&P 500 showing strong seasonal performance. Historical data highlights positive average returns and elevated win rates for major indices, supporting the notion that “stocks go up” — at least in July. This article dives into multi-decade trends and technical levels to watch for global indices as we head into the second half of the year.
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July Seasonality Analysis for Global Indices
Indices tend to have a positive skew overall, hence the adage “stocks always go up”. We know there is lots of noise in between with various pullbacks or bear markets of all sizes but, if back testing has taught me anything, it is that indices tend to provide bullish results if the data set is large enough.
It is therefore no major surprise to se that July has generally provided positive average returns and win rate for Wall Street indices such as the Nasdaq 100, S&P 500 and Dow Jones. The FTSE 100, ASX 200 and Hang Seng also share the same bullish relationship.
- Overall, indices have closed higher in the monthly of July 61% of the time
- They have a combined average positive return of 1.4% over the past 30 years
- The 10-year has the strongest positive average of 3%
- The 5-year averages a positive average of 2.4%
Data compiled by Matt Simpson – Data Source: LSEG Workspace
How to Read the Seasonality Matrix for Indices
The above table may appear more complex than it really is, but a shortcut is to focus on the top section to see if there are cluster of ‘positive’ or ‘negative’ cells.
- Positive: A market has averaged positive returns that month, with a win rate above 50%
- Negative: A market has averaged negative returns that month overall, with a win rate below 50%
- Blank: No clear relationship between average return and win rate
For those that wish to drill down further, the matrix shows average returns for all indices per month over a 5, 10, 15 and 30-year period. The lower section then displays the win rate in percentages (positive closes or negative closes), the actual number of positive or negative months, and then average percentage return on positive months versus average returns of negative months.
Nasdaq 100 (NDX) Seasonal Trends: July Performance Overview
- Over the past 40 years, the Nasdaq 100 index (NDX) has averaged a 0.7% gain in July, making it one of the more consistent months for bullish performance.
- July also boasts a 66.7% win rate — meaning two out of every three Julys have closed higher for the Nasdaq 100.
- Its average high-to-low range for July is around 10%, making it the second least volatile month of the year (behind June).
In contrast, October is historically the most volatile month for NDX, with an average range of 14.2%. - This historical seasonality supports the broader bullish narrative for tech stocks and US equity indices during July.
Chart analysis by Matt Simpson - Source: LSEG Workspace
S&P 500 (SPX) Seasonal Trends: July Performance Overview
The general pattern between the Nasdaq 100 and S&P 500 is quite similar, though there are slight differences. But the fact that they share similar seasonal patterns when we have an eight decade data set for the S&P 500 compared to 4-decade dataset for the Nasdaq 100 shows the relationships are solid over the long term.
- July is the third least volatile month for the S&P 500 in July compared the second least volatile for the Nasdaq.
- The win rate on the S&P 500 is lower at 57.8% (67% on the Nasdaq)
- The average return is also slightly lower on the S&P 500 at 1.1%
- So while the S&P 500 tends to perform well in July, the Nasdaq 100 tends to outperform
Chart analysis by Matt Simpson - Source: LSEG Workspace
How to Use Seasonality in Nasdaq 100 and Index Trading
There are often logical reasons behind long-term seasonal trends in markets. But that doesn’t mean they always play out. A strong macroeconomic catalyst or shift in sentiment can easily override seasonal patterns — as seen in June, when Wall Street indices rallied on improved risk appetite and reduced geopolitical tensions, despite historical data suggesting a weak month.
Ultimately, seasonal patterns are just averages from the past. They’re not a crystal ball, but they can be a helpful tool when paired with technical and fundamental analysis. Seasonality tends to be most effective when it aligns with broader sentiment or macro trends. The real trick is knowing when to rely on it — and when to step aside.
As the Nasdaq 100 trades near record highs heading into July, a pullback could seem overdue. But if risk appetite holds up, historical seasonality may help reinforce the bullish narrative and give dip-buyers more confidence.
Nasdaq 100 Futures (NQ) Technical Analysis
Nasdaq 100 futures (NQ) closed at a marginal record high on Monday, maintaining a strong bullish trend structure that suggests further upside potential. However, a short-term shakeout or pullback from current levels would not be surprising.
A runaway gap has formed around the 20,500 level — a pattern that often marks the midpoint of a larger move. If this holds true, it implies a potential upside target near the 25,000 mark for Nasdaq futures.
Should prices retrace from current highs, bulls may look to buy dips towards the 22,000 region, which aligns with the June VPOC (volume point of control). This zone could act as a support base for an eventual continuation rally toward 25,000.
Chart analysis by Matt Simpson - Source: TradingView / ICE
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-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
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