These Four Tools Were Built for the Chaos of 2025

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BY KEITH KAPLAN CEO, TRADESMITH

Believe it or not… 2025 is almost halfway over.

It’s been a whirlwind of a year so far. A year of major transition both for the world and for us here at TradeSmith.

We’re grappling with a new presidential administration. Not just any administration, but the first nonconsecutive second term in over 100 years.

With that comes a rewrite of the rulebook on trade, government spending, taxes, immigration… and a lot more.

That was always going to make waves in stocks. And those waves took the S&P 500 up as much as 4.5% by February… then on a quick trip down 21.3% from those highs. Now it’s up just 2% year to date.

In between has been endless drama about tariffs, DOGE, spats between the president and Elon Musk…

Now, throw war in the Middle East into the mix… And it’s a recipe for continued market chaos.

So, I’m grateful that all this year at TradeSmith, we’ve been focused on building strategies that help you make money nonetheless.

• In January, we launched our new Seasonality-based trading strategy, helping you find the best evidence-backed seasonal trading ideas.
• We followed that up with the Snapback strategy in February, perfect for isolating oversold conditions and buying stocks before they rebound.
• Then in April, we launched the new Predictive Alpha Prime model – which uses advanced AI algorithms to find the best trade and the best timeframe on any given day.
• And just two weeks ago, we launched Jeff Clark’s Convergence and Divergence scanners – which help you find those tightly coiled springs and those overstretched rubber bands which can both lead to big trading returns.

Bottom line, while a lot of buy-and-hold investors got caught flat-footed this year, we’ve been able to harness the chaos to our advantage.

Our affinity for building trading systems, your interest in using them, and the market conditions necessary for you to make good use of them all came together.

At the same time, though… I’ll be the first to admit that it’s been quite a lot of successive launches this year.

I’ve heard from several TradeSmith subscribers – especially our Platinum subscribers, who have gotten access to all of the above and more – that it’s hard to keep up with all the new strategies… and to know how to best use them.

I consider that a great problem to have! But nonetheless, today I’ll recap each of our newest innovations so far this year… give you a fresh trade idea from each…

And at the end, I’ll share some details about how our next big release has the potential to crank all these strategies up to 11.

When and Why to Use Our Four Brand-New Strategies

Each of our strategies this year was designed to help you take advantage of chaotic markets like we’re in now.

We bring you very quick, short-term trades of a few days or a few weeks in the Snapback strategy or in the new Predictive Alpha Prime projections…

Or you might want longer-term swing trades taking place over a couple of months, which our new Seasonality system is perfect for…

Or for major compressions and expansions that can take place anywhere in between, which you can find with Jeff Clark’s strategies now that they’re integrated into TradeSmith.

These four tools have you covered on individual stocks to trade no matter how the broad market is acting.

Let’s start with our Seasonality strategy. Below is an upcoming seasonal pattern on Microsoft (MSFT). In the past 15 years, MSFT has seen an average return of 4.2% from June 28 to July 18:

Our team recently added an Optimal flag to these Seasonality charts, which shows seasonal patterns with a historically high accuracy rate. Some of those even get the Seasonal Synergy flag – that one shows up if the stock is also at its optimal Relative Strength Index (RSI) reading when the seasonality pattern begins. In Microsoft’s case, our backtest showed that best time to buy was when its RSI was at 51 or below.

With this tool, you’re mainly looking for swing trades to the upside or downside. In this case, you want to either buy MSFT stock… hold the stock you have… or head over to the options market and look for the best way to leverage the coming move.

Now let’s look at an opportunity in the Snapback strategy.

This strategy fires when two of a stock’s short-term moving averages (the values are reserved for our subscribers!) are at least 5% apart and the stock is down in the past three months. It’s perfect for finding short-term, brutal selloffs that are bound to snap back in the other direction.

Across all the major benchmarks right now, there are only three Snapback signals, including this one that just triggered on Tuesday in Lululemon (LULU):

Snapback gives you an exit strategy, too. If and when LULU trades back above the blue line on the chart above, or it’s 21 trading days from the day the signal fired (Tuesday, June 17), then LULU is a sell.

In our backtest, we found that 80% of the stocks that showed this signal over the next 21 trading days saw positive forward returns. And on average, counting both winners and losers, the stocks gained 15.8%.

That gives you both a timeframe to work with and a price target. LULU would trade at around $279 per share in the next 21 trading days if this works out in line with the average return. Another great setup for the options market.

Since it’s fresh in my memory, let’s take a look at Jeff Clark’s Convergence and Divergence scan.

We spoke about this scan last week. It looks for “coiled spring” setups in stocks that are primed to fly… and “overstretched rubber bands” opportunities in stocks that are vulnerable to a pullback.

The coiled spring Convergence setups have had a win rate of 72% over the last 10 years. And the rubber band Divergence setups won 61.9% of the time… with winning trade from both strategies generating an average return of 5.5% over the last year.

Here’s one of those coiled spring setups in International Flavors & Fragrances (IFF)…

The three moving averages that make up this system are coiled together, with the stock making higher lows. It’s also noteworthy that it’s coming off a pretty nasty decline, with the shares trading from a high of over $100 to a low of just under $70 in just a few months:

IFF could be bottoming out, and this reading shows us it could be starting a new uptrend.

Now here’s an overextended chart in Oracle (ORCL). This one has all of those same moving average lines spread far apart, and the stock itself is way ahead of them. Conditions like this tend to precede a snap back in the opposite direction:

If you own ORCL stock, you might look at this and see it as a good place to be taking profits. Or, if you think the upside is limited in the short term, you might want to sell covered calls on your shares to generate income.

Lately I’ve been sharing a lot of great Predictive Alpha Prime projections on my X account, because it’s just constantly finding newer, better ideas.

Predictive Alpha is our AI-powered stock projection system. We’ve trained it on a ton of stock data already. And with every passing day of price action, the system gets just a little bit smarter and more effective.

That’s why I take its forecasts seriously… and so should you.

Here’s one of the top Prime forecasts the model is showing right now, on Booking Holdings (BKNG).

Right now, the Prime model for BKNG is projecting a 4.43% gain over the next 21 trading days:

Once again, you can buy the stock… or you could trade this move with options. If you already own the stock, you could sell puts on it to generate income.

If you’re noticing those little “internal only” flags on the screenshot above, that’s something we have for TradeSmith team members to test out new features before they go live.

And right now, we’re in the process of implementing our new Predictive Alpha Options algorithm.

I’m incredibly excited about this new version of Predictive Alpha Options.

I can’t give away too much about it right now, but I can say that it’s a major upgrade on the scale of what we did with Predictive Alpha Prime earlier this year.

We’ve greatly improved the user experience, the accuracy, and the integration with the rest of the Predictive Alpha suite.. Just as with Prime, we were able to do it thanks to how rapidly AI is advancing these days.

If the first half of this year has been about finding systems to spot great short-term trades, then this next endeavor is about tapping into the power of options to make our best AI-driven ideas even more profitable.

It’s the perfect complement to everything we’ve been working on this year, and I can’t wait for you to start using it.

Starting tomorrow, all our current Predictive Alpha Options as well as our Platinum subscribers will be able to test out the newest software. And we’ll have more to share on the new Predictive Alpha Options very soon here in TradeSmith Daily.

All the best,

Keith Kaplan
CEO, TradeSmith

P.S. If you haven’t already followed me on X, you should know that every day I’m posting free trade ideas based on TradeSmith’s software and my own thoughts on the market.

Here, for example, is an idea I posted on Advanced Micro Devices (AMD) earlier today:

Follow me @KeithTradeSmith for more! Or if you’re a Platinum member, we’ve now integrated my posts right into your TradeSmith Finance dashboard.