These Stocks Perform Best in October

Based off historical seasonality trends, the following stocks have outperformed all others in the past.

ETF,  Month’s Up %, Average Monthly Return

XPP, 100%, +11.6%

TQQQ, 80%, 11.35%

FAS, 83%, 8.23%

Stock, Month’s Up %, Average Monthly Return

V, 85%, 4.75%

MA, 88%, 7.2%

GS, 81%, 4.79%

DEO, 78%, 3.1%

MS, 77%, 5.4%%

CTSH, 76%, 10.7%

VLKPY, 100%, 16.4%

NXPI, 80%, 8.8%

NDAQ, 76%, 5.8%

UNFI, 77%, 3%

INTU, 77%, 8%

MSTR, 77%, 20%

GNRC, 80%,19%

AAL, 90%, 15%

DAL, 87%, 13%

BBW, 80%, 10%

Overall, October is the single best month for the market, historically.

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Caixin/Markit, a private survey done without government “help”, revealed that China’s economy is effectively in ruins, at 6 year lows. This, of course, ties in pretty nicely with the cataclysmic events that have harangued commodity related stocks over the past quarter.

Without China, commodity producers are like dicks without balls.

On that news, because we live in bizarro land, futures are flying, alongside Asian indices.

It was a quarter spawned from hell, at the behest of evil men who live near active volcanos amongst savage tribes. I faired poorly, getting deballed to the tune of 15%, placing my YTD returns at around 10-13%. Who’s counting anyways?

The following are the winners and losers of Q3, grouped by market cap. At the end are the reported holdings and 3 month returns of Greenlight Capital. Naturally, I am unsure as to the nature of his downside hedges. But his portfolio of concentrated “value” stocks treaded dreadfully the entire quarter. I am sure his losses are severe.

BIG CAP WINNERS

MIDCAP WINNERS

SMALL CAP WINNERS

And now for the losers.

BIG CAP

MID CAP

SMALL CAP

David Einhorn’s Greenlight Capital’s basket of hand woven defeat

Three cheers for the short sellers who profited from the misery of the majority.

I am calling for a 10% upward move in the NASDAQS for the month of October. Now that Twitter assigned a new incompetent, Jack Dorsey, to run that company into the dirt, all is well.

My favorite stocks down here are AMCX, SHAK, JAZZ, CLX and TWTR. I know that contradicts my previous sentence about the company being drilled into the ground. That’s sort of the point. We’re supposed to go lower. But we won’t. Then when we’re supposed to go higher, we’ll go lower. Everyone loses, ultimately. The house (Goldman Ball Sachs) always wins.

At the end of October, I will begin, in earnest, buying up oil and gas shares. I am strictly using seasonality stats for this position.

Alas, I am relieved we’re entering Q4, despite the fact that we’re not out of the woods yet. Plenty of market turmoil has transpired in October. However, considering the recent damage done to the markets, coupled with strong seasonal trends supporting an October rise, I like my chances long here–teetering on the brink of disaster.

What are your top picks heading into Q4?

I don’t know which coffee conglomerate made today a holiday– but I’m not exactly opposed to it. I have a long, rich, history with coffee. It all started out when I was a punk nobody cold caller, trying to get jacked up on caffeine, so that I could muster up the courage to get hung up on 400 times per day. My gateway coffee was the frappacino. I’d make sure that fucker was lathered with extra whipped cream and lots of chocolate syrup. What the fuck did I care? I was 150lbs wet.

Then I moved on and progressed to a more serious version of coffee. My coffee mentor was, naturally, a sociopath and him and I did great things together. He introduced me to iced coffee with milk, with 5 sugars, and I loved it. I’d go down to the local deli and order that fucker, rip 5 bags of sugar into it, then proceed to cold call until my fingers started to bleed.

After a while, the sugar was a bit gratuitous. I had gained 40 pounds, likely due to all of that fucking sugar’d coffee I was drinking, so I moved onto other forms. I tried espresso and hated it. I never tried a latte or cappuccino, but I disliked how the words rolled off my tongue, so I avoided them. Then I found Dunkin’ Donuts and loved it. By this time I only needed two sugars to please my palette and I was good to go, wired the fuck up for a day filled with unsolicited phone calls.

As I matured and money started to roll in, I felt Dunkin’ Donuts was a very blue collar’d existence, as it pertained to coffee. Naturally, the smartest thing for me to do, as some of you probably remember through my blogs, was to get addicted to MONSTER ENERGY SODA. I popped those fuckers, tall cans, 3 times per day. I wasn’t cold calling anymore. Instead, I was blogging like the wind, banning people from reading me–dealing with financial turmoil. Those were the days.

Fast forward to now, I have a very sophisticated coffee palette. I stopped using the disgusting Keurig device several years ago. I grind my own beans and French Press them into a cup, barren from sugar or milk. I enjoy the taste of espresso and would never drink a frappaccino. A few years ago, I tried a latte and was hooked. I can jimmy rig one myself, at home, simply by brewing espresso beans with very little water, French Press it, then mix with frothed milk.

My favorite coffee shoppe, locally, is Small World Coffee in Princeton. My favorite coffee of all time, believe it or not, is made by Starbucks. For a while I was hooked on their flat white, which was a B version of Small World’s fantastic latte. But then SBUX changed the coffee game with their CLOVER MACHINE. Holy shit, you guys need to try it. I’ve tried all of their fancy beans, but good olde fashioned French Roast is still #1. It’s like an inverse french press that calibrates temperature and brew time to produce the world’s best coffee ever.

As an aside, I hate Turkish coffee, so don’t try to sell me on it. The entire country of Turkey hasn’t produced a single edible product in well over 1,000 years.

If this is anything like 2011, which people keep comparing this to, we could be setting up for an epic run in the NASDAQIRIS.

Just a little FYI: Exodus has been oversold in 5 of the past 6 days. The last time we had so many OS signals, in such a short a time frame, was the hard bottom lows of August, 2010. The below graphic shows you the loss in August of 2010 to be a little more than 5%. Those out there who were trading it know the average momo stock was down a lot more than that.

The NASDAQ fell by 4.49% in September of 2011, very similar to our -4.6% drop now. It’s worth noting, the month after Exodus flagged all of those oversold signals, the NASDAQ ran like a wild beast, +13.17% in September.

In October of 2011, the NASDAQ annihilated all short sellers, ate all the chickens, and pillaged all the villages, running up by more than 10%. It’s worth noting that it went up another 6% in 2010, following that 13% September rout, which was all signaled by our algorithms in Exodus as ‘extremely’ oversold–just like now.

Bottom line: History may not repeat itself, but it rhymes. It might not play out exactly according to script, but there will be similar storylines playing out now–very reminiscent to the dark days of 2010 and 2011.

Earlier this week the metal giant plunged by 29% in one day, following some fucktard research note, penned by an idiot, causing people to surmise Glencore was the Lehman event of our time.

Listen to me: Lehman was Lehman. I knew Lehman. Glencore is no Lehman (extra Dan Quayle attack).

Look at the damned 5 day chart, ok?

In other news, and way more interesting, Russia is bombing targets inside Syria and demanding the U.S. stand the fuck down.

One more odd piece of news: Unisplendour is making a $3.77 billion invesmtment in WDC at–get this–$92.50. WDC closed at $69 yesterday. Pray tell me why the fuck are they paying up like that, in a liquid, large cap stock, like WDC?

In summary, Glencore isn’t the next Lehman and they really were under hedge fund attack. Russia issued a démarche to the US and is bombing ISIS. And, lastly, some private equity firm just got played by the swindlers at WDC.

European markets are higher by more than 2% and our Dow futures are up 180. One small deal of note this morning: MLNX is acquiring EZCH for $25.50. If any of you are wondering what might drag the market out from its bleak existence, it is deals. If we start to see a few deals in the biotech and semiconductor space, both hated industries right now, you’ll see this market run higher.

How bad was Q3?

Oil and Gas Exploration sector was -43%

Aluminum -38%

Minerals and Miners -35%

Nuclear -32%

Solar -32%

Oil and Gas Pipelines -31%

Silver -31%

Shipping -30%

Steel and Iron -30%

Chinese Burritos -27%

Chemicals -27%

Copper -27%

3-D Printing -25%

Biotech -25%

The list goes on and on. It was an absolutely dreadful quarter, with safe haven found in only a handful of sectors, like airlines, utilities, REITs and consumer staples. To sum up Q3: it was all about China and how horrible they are and how their economic turmoil was going to lay waste to ours.

Hopefully we can find some redeeming qualities in this market in Q4, decouple from the barbarians in the east and get back to banking coin.

Asian markets are enjoying respite this evening and S&P futs are trading at session highs. If you’re short stocks, I hope you toss and turn this fine evening–and wake up to Janet Yellen vomiting into your fucking faces.

Let’s have a look at some of the key players.

AAPL is trading 12x earnings, a 26% discount to its 10 year historical median. They are also trading at a 22% discount on a price to sales basis too. Their FPE is 11x. Based on the high estimates, it’s trading at 9x.

GOOGL is trading 29x earnings, a 6% discount to its 10 year historical median. They are also trading at a 5% discount on a price to sales basis too. Their FPE is 21x. Based on the high estimates, it’s trading at 18x.

MSFT is trading 29x earnings, a 74% premium to its 10 year historical median. But I think that number is screwy. On a price to sales basis, it’s trading at a 7% discount. Their FPE is 16x. Based on the high estimates, it’s trading at 11x. The 10 year historical median PE is 17.

WFC is trading 12x earnings, a 9% discount to its 10 year historical median. Because it’s a bank, we’ll be looking at its p/b ratio, which is 1.53, a discount of 4%. FPE is 12, based on high estimates 11.

AMZN isn’t interested in making money. Therefore, its PE is negligible. On a p/s basis, it is trading at 2.46, in line with its 10 year historical median. I haven’t the slightest idea how to value AMZN.

DIS is trading at 20x earnings, a 12% premium to 10 year historical median. On a price to sales basis, it’s retardo expensive, more than a 70% premium based on a 10 year median. It is, however, in line with the new valuation that Wall Street assigned it the past 3 years. FPE is 17, a slight discount to the 10 year median.

I can do this all day, using the Exodus platform. I’ll end it with WMT, which is trading at 13x earnings, a 13% discount to its 10 year historical average. Based on p/s, it is trading at a 16% discount. And, finally, they have a FPE of around 13x.

The overall market is trading at 18x earnings, the lowest since 2012. On a price to sales basis, stocks are cheap at 1.78x, the cheapest since 2012. The p/b is at 1.87, again the lowest since 2012.

In short, stocks are only cheap if the earnings aspect of the PE remains constant. If earnings are to be drastically cut back, stocks might have a rough ride over the next 6 months. By all measures, stocks are moderately priced, not even remotely close to the excessive valuations of 2000.