A Seasonal Break?

It’s been a tough week and a half for bulls as equities have been under pressure since the start of October. While issues surrounding China don’t seem to be getting any better, seasonal trends may be starting to take a turn for the better.  In the graph below, we calculate the S&P 500’s historical median return in the one week, one month, and three months from the close on 10/8 over the prior ten years. While the S&P 500’s median one week return is a middling 0.33%, ranking in the 53rd percentile relative to all other one week periods throughout the year, the median one and three-month returns have been much more impressive at 2.41% and 6.22%, respectively.

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In addition to the upcoming month being a good period for the overall equity market, there are a number of stocks that have traded higher during the one-month period in each of the last ten years. While it’s relatively common to see one or two stocks that have a perfect record of trading higher during a random one-month period of the year, nine is pretty high. Also, with names like Hormel (HRL), Analog Devices (ADI), and Starbucks (SBUX) on the list, they aren’t all companies no one has ever heard of either.

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On the left side of the table below, we show each stock’s performance metrics YTD, over the last five trading days and where each stock is trading relative to its 50-day moving average. In addition to the performance metrics, we also show whether the stock is in an up, down, or sideways trend using our proprietary algo, how the stock’s timing currently stacks up, whether the stock is oversold, overbought, or neutral, and then finally where it is trading relative to its trading range. Looking at the names on the list, SBUX looks the most attractive as the stock is at extreme oversold levels but also has a perfect timing score given its uptrend.Meanwhile, Pier 1 (PIR), which is in a downtrend and coming off overbought levels currently has a timing score that ranks a poor. Interested in tracking seasonal patterns of the market and individual stocks?  

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