These Stocks Tend To Rally In August (Seasonality)

August is a poor month for stocks, but these stocks have still managed to climb at least 70% of the time and produce as much as 7% gains on average. 

Seasonality is the study of how assets perform at certain times of the year. The stocks below have shown a strong tendency to rise in August, historically. That doesn’t mean they will rally this August, though. Seasonality is best used in conjunction with other forms of analysis and specific trading strategies.

Before getting into the best historical August stock performers, August is historically one of the worst months of the year for stocks. Over the last 19 years the S&P 500 index has moved higher in August 53% of the time (number above columns), but overall has dropped more than 1% on average each year (number at bottom of columns). In more recent history, August has also fared poorly. For example, over the last 10 years, it is up 50% of the time, dropping on average -0.8%. Over the last 5 years, it is up 40% of the time, dropping -0.8% on average.

SPX august seasonality

StockCharts.com

Long-term, and short-term, August has sucked. Basically, that means it will be harder to find quality opportunities in August…and our best August stock performers listed below echo those words. The percentages are much lower than we typically see in other months.

Strong Seasonality Stocks for August

The statistics below are based on the historic monthly opening and closing prices. Therefore, gains or losses within the month may be larger than those disclosed below. For example, a statistic may say the biggest rally on a monthly basis was 15%, but during the month the stock could have been up 20%, but dropped to only finish the month up 15% (intra-month losses could also be bigger). This is why it is also recommended traders combine these statistics with other strategies, which help control risk and lock in profits.

Buying at the open and close of the month is also somewhat arbitrary. There are more precise times to take trades. Focus on seasonal opportunities that align with strategies you are already using.

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Disclosure: The author doesn’t have positions in these stocks currently, but may initiate positions if the stock prices slide a bit lower.

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