Dow Stocks To Trade In September

September has a net negative return and is the most bearish month of the twelve. Calculating the annual cycle for years that were 2 years past an election (the four-year cycle) and for years ending in two (decennial cycle) show worse returns for this weak month. Here is how it breaks down:

All Septembers: 47.8%

Election Year Plus Two Years: 52.9%

Decennial Pattern: 38.5%

Both Election and Decennial Pattern: 33.3%

Here are the cycles-based trade recommendations for the DJIA stocks in this month. In August, the long trades returned an average of -2.26% versus a change of -4.06% in the DJIA in comparison to a return of -1.69% for the short sales. Over the last 32 months, the long stocks have risen by an amount about 50% greater than that of the short sales and 30% over the DJIA.

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 showing the top-ranked stocks. This new screen combines the seasonal rank for the month in column two and the relative strength rank in column three. The combined rank is in the last column. We can see that ChevronCVX
is ranked fifth and first respectively and number one overall.

Potential Strongest Performers in the DJIA Stocks in the Month

The market is likely to fall in September, so the short positions are favored.

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

Chevron

McDonalds

Amgen

Merck

WalmartWMT

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

IntelINTC

Walgreen-Boots

Disney

MMM

Home Depot