S&P 500 Stocks To Trade In July

s&p-500-stocks-to-trade-in-july

Photographer: Michael Nagle/Bloomberg

© 2022 Bloomberg Finance LP


Over the last 50 years, seasonality and relative strength have proven valuable in successful portfolio management. Seasonality is very effective with most stocks. For example, Archer Daniels Midland ADM has risen 80% of the time over the last 42 years from August through December. Holding the stock from January through July has proven to be a drag on any portfolio. Of course, not all stocks show this high level of seasonality. Close monitoring of relative strength is vital if a portfolio is going to exceed its benchmark. This approach utilizes two screens to rank stocks by both measures.

Tests on the Dow Jones Industrial 30 stocks have been successful. Over the last 30 months, the long stocks have risen by an amount about 50% greater than that of the short sales and 30% over the DJIA.

In June, the long trades returned an average of -4.25% versus a change of -6.71% in the DJIA in comparison to a return of -11.09% for the short sales.

For the month of July, the cycle/relative strength concept is applied to the S&P 500 constituents. First, the S&P 500 stocks with at least 30 years of price data 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 screen for the month is presented below showing the top-ranked stocks. This new screen combines the seasonal rank for July in column 2 and the relative strength rank in column 3. The combined rank is in the last column. We can see that Amphenol APH is ranked nineteenth and fifth respectively and number one overall.

Potential Strongest Performers in the S&P Stocks in the Month of July

These S&P stocks are likely to excel in July.

Cycles Research Investments LLC

Potential Weakest Performers in the S&P in the Month of July

These stocks are likely to lag in this month.

Cycles Research Investments LLC

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

Amphenol

Baxter Travenol

Biogen BIIB

Medtroni MDT c

Southwest Airlines LUV

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

Range Resources RRC

Constellation DAG Brands

Corning

Omnicrom Group

Pentair

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