+13% or +40%? Two Numbers, One Nasdaq
Look at the classic seasonality of the Nasdaq 100 (QQQ) and you land near +13% average annual return — the mean across all historical years. SeasonAlpha's AI seasonality paints a very different picture for 2026: +39.8% on average. The gap does not come from optimistic assumptions but from the method itself.
Instead of bluntly averaging over every year, the TruePath approach deliberately isolates the years that most closely resemble the structure of 2026 so far.
How TruePath Works
TruePath is SeasonAlpha's AI seasonality feature (/ki-saisonalitaet). The classic seasonal average treats every year equally — a crash year counts the same as a record year. That smooths real patterns away.
TruePath takes a different route using Dynamic Time Warping (DTW):
- DTW measures the structural similarity of price shapes — the form of the curve across the year, not just a single correlation figure.
- It compares the year-to-date 2026 path against every historical year and assigns a similarity score.
- Only the N most similar years feed, weighted, into the so-called pattern path.
- Structurally mismatched years are filtered out, which reduces statistical noise.
The result is a personalized expected path for the current year, built on genuinely comparable trajectories rather than an overall average.
The 5 Years Most Similar to 2026
For the Nasdaq 100, DTW identifies these five historical years as the closest match to 2026 — with each one's similarity score and the annual return it actually delivered:
| Year | Similarity | Annual Return | Presidential Cycle |
|---|---|---|---|
| 2007 | 69.1% | +18.80% | Pre-election year |
| 2003 | 65.8% | +43.60% | Pre-election year |
| 2013 | 63.3% | +32.40% | Post-election year |
| 2009 | 61.7% | +48.30% | Post-election year |
| 2023 | 56.4% | +55.90% | Pre-election year |
Two figures stand out:
- Average annual return of the match years: +39.8% — roughly three times the classic seasonal average.
- Hit rate: 100% — all five most similar years closed positive.
The composition is telling: 2003, 2009 and 2013 are classic recovery years after market lows that ran unusually strong. That explains part of the high average return — and it is also a warning sign, more on that below.
What the Chart Shows
The chart makes the difference visible. The grey dashed line is the classic seasonal average across all years — a flat, moderate uptrend toward +13%. The gold line is the TruePath pattern path from the five most similar years; it runs noticeably steeper.
The yellow line shows the 2026 path so far. It has tracked the gold pattern path closely — which is precisely why DTW flags these five years as similar in the first place. The green projection extends the pattern path through year-end.
Important: all trajectories are normalized — every year starts at 100, and daily returns compound on top. That makes years at different price levels directly comparable.
2026 in Context: Upside and Risks
The pattern path fits several conditions, but it does not replace your own judgment.
- Tailwind: Four of the five match years (2003, 2007, 2013, 2023) were shaped by strong tech and growth phases — an environment that structurally echoes 2026.
- Presidential cycle: Three of the five are pre-election years, which historically often outperformed. However, 2026 is a US midterm year, and the first half of such years tends to be seasonally weaker.
- Base-effect risk: The high average return is lifted by post-crash recovery years (2003, 2009). Such V-shaped catch-up years cannot be repeated at will.
Five observations are also a small sample. A 100% hit rate is impressive, but it does not guarantee a sixth positive year — it describes the past, not the future.
Conclusion
For the Nasdaq 100, AI seasonality points to a markedly stronger expected path for 2026 than the classic average: +39.8% across the five most similar years versus roughly +13% overall, with the current year tracking closely so far. TruePath filters out structurally mismatched years and delivers a sharper picture than a plain mean.
This is not a buy signal — rather a data-driven compass that surfaces both the upside and the base-effect risk. Check the QQQ pattern path yourself under AI Seasonality on seasonalpha.ai.
Frequently Asked Questions
What is the difference between AI seasonality and classic seasonality?
Classic seasonality averages over all historical years equally. AI seasonality (TruePath) uses Dynamic Time Warping to isolate the years whose price shape most resembles the current year, then forms a weighted pattern path from them.
What does Dynamic Time Warping mean for stocks?
DTW is a technique that measures the similarity of two time series by their shape, even when moves are slightly shifted in time. In markets it helps find years with a structurally similar price path, rather than comparing point-wise correlations alone.
Is a 100% hit rate a guarantee for 2026?
No. All five most similar years closed positive, but five observations are a small sample. The figure describes the past and is not a promise for the current year.
Where can I find TruePath for other tickers?
On seasonalpha.ai under the AI Seasonality menu item. You can select any supported ticker there; the feature recalculates the most similar years and the pattern path automatically.