The Profit Calendar is based on a simple idea — certain times of the year are better for different stocks.
Retailers, for example, tend to do well in October and November. Sell-offs in December and January are common.
This might seem counterintuitive. Holiday shoppers pack stores in December. But we’re talking about the stock rather than the business.
You see, traders tend to move prices ahead of the news. They push prices up in anticipation of the shopping season. They sell on the news that sales are strong.
This pattern drives seasonal trends in the retail sector.
But retailers aren’t the only stocks with strong seasonal trends. Almost all stocks show this kind of behavior. When building my Profit Calendar, I looked at these trends in several different ways…
Look Beyond the S&P for Seasonally Strong Stocks
The first approach is to look at sectors. Standard & Poor’s divides the market into 11 sectors. Stocks are also assigned to one of 24 industry groups. Then there are subindustries.
This is a comprehensive approach to defining the market, but it may not be the best approach for traders because some of the groups only include a few stocks.
To address that, I looked beyond this typical rating hierarchy and included STOXX thematic indexes. STOXX is an index provider based in Europe. Its thematic indexes are global. They follow many of the same principles as S&P ensuring liquidity and stability of the index components.
This provided several trading opportunities throughout the year. This week, we are entering a seasonally strong period for the NexGen Media sector. This index includes stocks that support the next generation of media companies, such as Netflix, Disney, Take-Two or other up and comers.
Media has been a dynamic sector for the past few decades.
Traditional television, magazine and newspaper companies dominated the sector in the 1990s. For a time, it looked like they would become the building blocks of the next generation of media companies. That idea led to the $180 billion merger of AOL and Time Warner in 2000.
But the deal was doomed from the start. The stock market bubble that allowed AOL to fund the deal burst within weeks. Two years later, the combined company reported a loss of almost $100 billion including write-offs related to the merger.
A more successful company of that era was Netflix. The company started by mailing DVDs to members. It adapted to become a streaming giant and major studio. Netflix has thrived in the dynamic media sector.
The thematic index includes companies like Netflix which are giants in the media space. It also includes companies that support these giants.
To find the specific stock trade in the dynamic media sector, I rely on Adam O’Dell’s Green Zone Power Ratings. This is a proven system that uses six factors to rate stocks from 0 to 100 to filter out the best-performing stocks from the ones to avoid.
This month, my Profit Calendar has identified a particular company in this sector that’s benefiting from growth in online gaming. (I just recently released the name of this top-ranked stock to my Apex Alert readers.)
The Profit Calendar we use is simple to implement. It shows us the right time to buy and sell — and works with the Power Ratings system to show us the right stock trade in each profit season.
You can see exactly how my Apex Alert strategy uncovers the best-performing stock to trade in each of the 15 profit seasons in my presentation here.
Until next time,
Mike Carr
Chief Market Technician