Investing

Stocks To Trade In September

Thus far, seasonal weakness has been offset by excess credit creation and sentiment. The S&P is likely to hold up until mid-month. The third week in the month is the weakest. The period the 20th through the 24th is the week after OPEX. This week is most bearish in the month of September. It overlaps with the following time interval. The period from the 16th through the 25th is one of the weakest in any year. This period has been up only 27% of the time since 1980. Switching the analysis to the Dow Jones since 1885, we see that the 18th to the 27th has been the weakest period, down about 60% of the time. Therefore, the long selections below are favored in the first half of the month and the short sales are favored in the second half.

Here are the cycles-based trade recommendations for the DJIA stocks in this month. In August, the long trades returned an average of +1.43% versus and a change of +1.22% in the DJIA in comparison to a return of +1.39% for the short sales.  

For the month of September, the cycle/relative strength concept is applied. First, the Dow Jones 30 stocks are ranked from the best performer to the worst by calculating the expected return in that month. The top stocks were screened as follows. The top best traditional performers in the month were then screened for relative strength by a unique measure that sorts by several relevant time periods. Those that pass both screens are buys for the month. The stocks that are both weak monthly performers and weak relative performers are short sales for the month.

The seasonal screen for the month is presented below. The number of years of data is in the last column. The Times Return column shows the percent of months in which the stock rose. The Return column shows the average percentage gain in the month. The Expected Return column is the product of columns two and three. We can see that Cisco has been trading for 31 years and has risen in 67.7% in all the months of September. The average return has been 0.05% and the expected return is 0.03%.

Average Performance of the DJIA Stocks in the Month of September

Of the strongest, these stocks show strong relative strength and are considered buys for the month:

Cisco

Salesforce
CRM

Microsoft
MSFT

Nike
NKE

JP Morgan

Goldman Sachs
GS

Regarding the weakest, these stocks show declining relative strength and are suitable short sales:

IBM
IBM

MMM

Inte
INTC
l

Caterpillar
CAT

Coca Col
KO
a

Walgreen-Boots

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