Seasonality Magic

The biggest standout for October, with regards to seasonality, was FFIV. I bought and sold the stock in September, but never played in October, regrettably. Like many of you, I am skeptical of seasonality and use it as a form of entertainment, instead of something tangible.

With today’s move in FFIV, it is within 1% of its historical average gain in October, a staggering +26%. Other top names for October that have done well include MSTR, HS, RNOW, SYNA, DGII, just to name a few.

What’s in store for November? A comprehensive seasonality toolset is available via The PPT and I will be posting a few screens worth member perusal soon. There are many ways to look at the data, stemming from average % gains to average win rate. A few that stand out are RMBS, CCOI, EXK, FSM, CCBG (flawless), MTD (flawless) and UPS. The overall prevailing theme is gold and silver. Aside from individual seasonality data, we provide information for over 200 sectors.

During the month of November, silver stocks had an average win rate of 60% for an average return of +6.35%. For the month of October, the average loss for silver stocks was 7.21%, by far the worst month of the year for silver.

All in all, over the past 17 years, the S&P has been up in the month of November 70% of the time, for an average return of 1.75%. Knowing this information, it’s important to position into the right sectors to take full advantage of a possible run. That entails buying into sectors that do well during November, in addition to all of the other things you may do to pick stocks. For example, a wide array of solar stocks do poorly in November. This is definitely something you want to know ahead of initiating a long position.

As an aside, be careful about bottom fishing in these high multiple momo stocks getting smashed. Names like HANS, AMZN, NFLX and GMCR may be tempting. However, more often than not, pikers like you get blown out in these names, due to lack of liquidity.

Avoid.