Stocks To Trade In October

Here are the cycles-based trade recommendations for the DJIA stocks in this month.

For the month of October, 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 percent of months in which the stock rose in that month. The top 10 were screened as follows. The top ten 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 October performers and weak relative performers are short sales for the month.

In September, the four long recommendations rose by an average of 0.48%, ranging from 12.20% for Nike to -7.82% for Salesforce. The three short sales fell by an average of 1.40% ranging from -5.52% for Walgreen-Boots to +1.63% for Intel. The DJIA fell by 2.28%. The numbers are ranked below:

Longs: +0.48%

DJIA: -2.28%

Shorts: -1.40%

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 Goldman Sachs has been trading for 21 years and has risen in 85.7% in all the months of October. The average return has been 4.62% and the expected return is 3.96%.

Average Performance of the DJIA Stocks in the Month of October

Of the top 10, these stocks show strong relative strength and are considered buys for the month:

Apple

Salesforce

Microsoft

McDonalds

United Health

Procter and Gamble

Regarding the weakest 10, these stocks show declining relative strength and are suitable short sales:

MMM

IBM

American Express

Intel

JP Morgan

Cisco

Boeing

Chevron

Market cycles point higher in October, so the buys are favored.