Trading Seasonality in Individual Stocks

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Options Broker 2020!
    Great Choice For Beginners!
    Free Trading Education!
    Free Demo Account 1000$!
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Only For Experienced Traders!

Top Performing Stocks in January (Seasonality)

January is not a good month for the stock market overall. The S&P 500 is usually flat to lower during the month. BUT, there are individual stocks that excel in January, rising at least 70% of the time and producing as much as 17% gains during the month. Stocks mentioned: EQC, FAX, CYTR, ALKS, DIS, CRUS, LEN, HRS, ERIC, ALK, XLNX and OSK.

Seasonality is the study of how assets perform at certain times of the year. The stocks below show a strong tendency to rise in January, historically. That doesn’t mean they will rally this January, though. Seasonality is best used in conjunction with other forms of analysis and specific trading strategies, such as the ones discussed in the Stock Market Swing Trading Video Course.

Before getting into the best historical January stock performers, stocks as a whole, as gauged by S&P 500 index, tend to be mediocre in January. Over the last 20 years, the index has moved higher 50% of the time (number on top of January column), and has dropped by an average of -0.5% (number at bottom of January column).

Strong Seasonality Stocks for January

The statistics below are based on the historic monthly opening and closing prices. Therefore, gains or losses within the month may be larger than those disclosed below. For example, a statistic may say the biggest rally on a monthly basis was 15%, but during the month the stock could have been up 20%, but dropped to only finish the month up 15% (intra-month losses could also be bigger). This is why it is also recommended traders combine these statistics with other strategies, which help control risk and lock in profits.

Buying at the open and close of the month is also somewhat arbitrary. There are more precise times to take trades. Focus on seasonal opportunities that align with strategies you are already using.

This is the raw data. How you interpret it, and what you opt to do with it, is up to you.

All stocks do at least 500K in average daily volume. Stocks with average or median gains of less than 3% are typically excluded.

82% Rally Rate

Equity Commonwealth (EQC)

Price has rallied 23 out of 28 years, or 82%.

Average January gain is 3.64%.

In the rising months (23) the average gain has been: 5.19%.

In declining months (5) the average loss is -3.5%.

Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Options Broker 2020!
    Great Choice For Beginners!
    Free Trading Education!
    Free Demo Account 1000$!
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Only For Experienced Traders!

Biggest gain is 21.41%, and biggest drop is -6.38%.

79% Rally Rate

Aberdeen Asia-Pacific Income Fund (FAX)

Price has rallied 22 out of 28 years, or 79%.

Average January gain is 2.95%.

In the rising months (22) the average gain has been: 4.2%.

In declining months (6) the average loss is -1.62%.

Biggest gain is 11.07%, and biggest drop is -4.1%.

CytRx Corporation (CYTR)

Price has rallied 22 out of 28 years, or 79%.

Average January gain is 17.61% .

In the rising months (22) the average gain has been: 27.4% .

In declining months (6) the average loss is -18.31% .

Biggest gain is 99.91% , and biggest drop is -35.19% .

77% Rally Rate

Alkermes (ALKS)

Price has rallied 20 out of 26 years, or 77%.

Average January gain is 10.15%.

In the rising months (20) the average gain has been: 18.32% .

In declining months (6) the average loss is -17.08% .

Biggest gain is 40.29%, and biggest drop is -56.67% .

75% Rally Rate

Walt Disney Company (DIS)

Price has rallied 21 out of 28 years, or 75%.

Average January gain is 3.97%.

In the rising months (21) the average gain has been: 7.63%.

In declining months (7) the average loss is -6.99%.

Biggest gain is 24.13%, and biggest drop is -8.87%.

74% Rally Rate

Cirrus Logic (CRUS)

Price has rallied 20 out of 27 years, or 74%.

Average January gain is 9.55%.

In the rising months (20) the average gain has been: 16.69% .

In declining months (7) the average loss is -10.84%.

Biggest gain is 50.67%, and biggest drop is -20.49% .

71% Rally Rate

Lennar Corporation (LEN)

Price has rallied 20 out of 28 years, or 71%.

Average January gain is 4.55%.

In the rising months (20) the average gain has been: 8.63%.

In declining months (8) the average loss is -5.65%.

Biggest gain is 28.71%, and biggest drop is -13.74%.

Harris Corporation (HRS)

Price has rallied 20 out of 28 years, or 71%.

Average January gain is 4.64%.

In the rising months (20) the average gain has been: 9.29%.

In declining months (8) the average loss is -6.96%.

Biggest gain is 28.29%, and biggest drop is -15.89%.

Ericsson (ERIC)

Price has rallied 20 out of 28 years, or 71%.

Average January gain is 4.48%.

In the rising months (20) the average gain has been: 9.09%.

In declining months (8) the average loss is -7.05%.

Biggest gain is 30.06%, and biggest drop is -16.87%.

Alaska Air Group (ALK)

Price has rallied 20 out of 28 years, or 71%.

Average January gain is 4.03%.

In the rising months (20) the average gain has been: 9.25%.

In declining months (8) the average loss is -9.03%.

Biggest gain is 25.31%, and biggest drop is -12.56%.

70% Win Rate

Xilinx Inc. (XLNX)

Price has rallied 19 out of 27 years, or 70%.

Average January gain is 7.67%.

In the rising months (19) the average gain has been: 12.68%.

In declining months (8) the average loss is -4.23%.

Biggest gain is 40.23%, and biggest drop is -10.88%.

OskKosk Corporation (OSK)

Price has rallied 19 out of 27 years, or 70%.

Average January gain is 6.52%.

In the rising months (19) the average gain has been: 12.67%.

In declining months (8) the average loss is -8.08%.

Biggest gain is 34.4%, and biggest drop is -18.78%.

Final Word on the Strong January Seasonality Stocks

This is the raw data. What you do with it is up to you. All traders are encouraged to do their own research and apply their own strategies if utilizing these statistics.

Each stock has a different risk profile. While the ‘average gain’ statistic is a key metric, it doesn’t tell the whole story. Making 7% may seem attractive but when looking at the volatility it may be more than you are willing to handle. Therefore, look at the all the data when deciding what to trade. Also, apply other technical and fundamental metrics to help zero-in on exact entry and exit points. Seasonality is not covered in my stock trading course, because it is a not a requirement for successful trading. That said, it is an additional tool you can use.

Losing trades WILL happen. Don’t risk more than 1% of your trading account on a trade (risk = difference between entry price and stop loss price, multiplied by the number of shares). There is always a risk in trading, and you can lose much more than you expect (even when you think you are only risking 1%).

By Cory Mitchell, CMT

Disclaimer: This article should not be viewed as investment advice, and is not a recommendation for you to buy or sell. Past performance is not necessarily indicative of future performance.

Firm Size, Stock Return Seasonality, and the Trading Pattern of Individual and Institutional Investors: The Canadian Experience

Journal of Investing, Fall 1997

Posted: 3 May 1998

George Athanassakos

University of Western Ontario – Finance-Economics Area Group

How to Buy Stocks

Buying a stock — especially that first time you become a bona fide part owner of a business — deserves its own celebratory ritual.

But before we pick out shareholder party hats and rent a ticker tape confetti cannon, let’s review the specific steps for how to buy stocks.

Step 1: Open an online brokerage account

Opening an online brokerage account is as easy as setting up a bank account: You complete an account application, provide proof of identification and choose how you want to fund the account. You may fund your account by mailing a check or transferring funds electronically. (We have a full guide to opening a brokerage account here.)

How do you find a broker that’s worthy of your dough? Two things to consider when opening an account to buy stocks:

1. The cost of commissions: The commission is the fee a broker charges each time you buy or sell a stock. Finding a broker that charges low or no commissions will be most important to active traders — generally, those who place 10 or more trades per month. (Learn more about the ins and outs of stock trading.) Commissions can add up quickly if you’re trading regularly.

But all investors should consider costs, as they eat into your investment returns. In our analysis, we’ve found two brokers come out on top for commission-free trades:

  • E-Trade offers commission-free trading of stocks, exchange-traded funds and options. Read our full review of E-Trade.
  • TD Ameritrade was our pick for beginner investors, and also offers commission-free trading of stocks, ETFs and options. Read our full review of TD Ameritrade.

2. How much support you want. Consider the broker’s offerings of educational tools, investment guidance, stock-trading research and access to real, live humans via phone, email, online chat or branch offices. This is especially important for beginner investors, as you will want knowledgable customer service representatives available to answer your questions.

In our research, Merrill Edge stood out for investor resources and customer service: The broker offers investors a notably large selection of research about stocks and other investments, and its website is stocked with educational videos, courses and webinars. (Read our full review of Merrill Edge.)

To compare all of your brokerage options, review NerdWallet’s full list of the best brokers for stock trading, or use the search tool below to find the right match for your investing style. (Article continues below tool.)

Get the best broker recommendation for you by selecting your preferences

What do you want to invest in?
What do you want to invest in?

Investors who trade individual stocks and advanced securities like options are looking for exposure to specific companies or trading strategies.

Mutual funds and ETFs are typically best suited to investing for long-term goals that are at least 5 years away, like retirement, a far-off home purchase or college.

Beginners and long term investors often look to get exposure to whole markets and don’t have a preference on which type of securities to trade.

How much will you deposit to open the account?
How much will you deposit to open the account?

Some brokers have minimum deposit requirements, while others may require a minimum balance to access certain advanced features or trading platforms.

If a broker is offering a new account promotion, there may be a minimum initial deposit requirement to qualify.

How often will you trade?
How often will you trade?

If you’re trading frequently — more than weekly — you’ll want an advanced broker that has powerful platforms, innovative tools, high-quality research and low commissions.

Those who trade monthly or yearly will want a well-rounded broker with a user-friendly interface, helpful customer support and competitive pricing.

Who will manage your investments?
Who will manage your investments?

Robo-advisor services use algorithms to build and manage investor portfolios. For a very low fee, they’ll create a portfolio of ETFs based on your investing goals and risk tolerance, then rebalance it as needed. Many also offer tax-loss harvesting for taxable accounts.

If that sounds too hands-off for you and you want to manage your own investments , choose a self-directed account at an online broker.

What is most important to you?
What is most important to you?

Low Cost: Mutual fund/ETF investors want access to funds without commissions or fees; stock or options traders want low commissions and no added fees for inactivity, tools or research.

Platform: If you plan to trade frequently, you likely know what kind of tools you’ll use most and what you want out of a platform.

User interface: Tools should be intuitive and easy to navigate.

Premium research: Investing, particularly frequent trading, requires analysis. The broker should provide extensive information to help you select the investments for your portfolio.

Top research; two powerful trade platforms; educational content

cash credit with qualifying deposit

on TD Ameritrade’s secure website

Large selection; low fees

cash credit with a qualifying deposit or transfer

on E*TRADE’s secure website

Offers access to human advisors for additional fee.

of free management with a qualifying deposit

on Betterment’s secure website

Step 2: Select the stocks you want to buy

Don’t let the deluge of data and real-time market gyrations overwhelm you as you conduct your research. Keep the objective simple: You’re looking for companies of which you want to become a part owner.

Warren Buffett famously said, “Buy into a company because you want to own it, not because you want the stock to go up.” He’s done pretty well for himself by following that rule.

Start with the company’s annual report — specifically management’s annual letter to shareholders. The letter will give you a general narrative of what’s happening with the business and provide context for the numbers in the report.

After that, most of the information and analytical tools that you need to evaluate the business will be available on your broker’s website, such as SEC filings, conference call transcripts, quarterly earnings updates and recent news. Most online brokers also provide tutorials on how to use their tools and even basic seminars on how to pick stocks.

To learn more about evaluating companies for your portfolio, see NerdWallet’s feature on how to research stocks.

Step 3: Decide how many shares to buy

Step 4: Choose your stock order type

Basic stock trading terms

Ask For buyers: The price that sellers are willing to accept for the stock.
Bid For sellers: The price that buyers are willing to pay for the stock.
Spread The difference between the highest bid price and the lowest ask price.
Market order A request to buy or sell a stock ASAP at the best available price.
Limit order A request to buy or sell a stock only at a specific price or better.
Stop (or stop-loss) order Once a stock reaches a certain price, the “stop price” or “stop level,” a market order is executed and the entire order is filled at the prevailing price.
Stop-limit order When the stop price is reached, the trade turns into a limit order and is filled up to the point where specified price limits can be met.

There are a lot more fancy trading moves and complex order types. Don’t bother right now — or maybe ever. Investors have built successful careers buying stocks solely with two order types: market orders and limit orders.

Market orders

With a market order, you’re indicating that you’ll buy or sell the stock at the best available current market price. Because a market order puts no price parameters on the trade, your order will be executed immediately and fully filled, unless you’re trying to buy a million shares and attempt a takeover coup.

Don’t be surprised if the price you pay — or receive, if you’re selling — is not the exact price you were quoted just seconds before. Bid and ask prices fluctuate constantly throughout the day. That’s why a market order is best used when buying stocks that don’t experience wide price swings — large, steady blue-chip stocks as opposed to smaller, more volatile companies.

Good to know:

  • A market order is best for buy-and-hold investors, for whom small differences in price are less important than ensuring that the trade is fully executed.
  • If you place a market order trade “after hours,” when the markets have closed for the day, your order will be placed at the prevailing price when the exchanges next open for trading.
  • Check your broker’s trade execution disclaimer. Some low-cost brokers bundle all customer trade requests to execute all at once at the prevailing price, either at the end of the trading day or a specific time or day of the week.

Limit orders

A limit order gives you more control over the price at which your trade is executed. If XYZ stock is trading at $100 a share and you think a $95 per-share price is more in line with how you value the company, your limit order tells your broker to hold tight and execute your order only when the ask price drops to that level. On the selling side, a limit order tells your broker to part with the shares once the bid rises to the level you set.

Limit orders are a good tool for investors buying and selling smaller company stocks, which tend to experience wider spreads, depending on investor activity. They’re also good for investing during periods of short-term stock market volatility or when stock price is more important than order fulfillment.

There are additional conditions you can place on a limit order to control how long the order will remain open. An “all or none” (AON) order will be executed only when all the shares you wish to trade are available at your price limit. A “good for day” (GFD) order will expire at the end of the trading day, even if the order has not been fully filled. A “good till canceled” (GTC) order remains in play until the customer pulls the plug or the order expires; that’s anywhere from 60 to 120 days or more.

Good to know:

  • While a limit order guarantees the price you’ll get if the order is executed, there’s no guarantee that the order will be filled fully, partially or even at all. Limit orders are placed on a first-come, first-served basis, and only after market orders are filled, and only if the stock stays within your set parameters long enough for the broker to execute the trade.
  • Limit orders can cost investors more in commissions than market orders. A limit order that can’t be executed in full at one time or during a single trading day may continue to be filled over subsequent days, with transaction costs charged each day a trade is made. If the stock never reaches the level of your limit order by the time it expires, the trade will not be executed.

Step 5: Optimize your stock portfolio

  • Make sure you have the right tools for the job. NerdWallet’s list of the best stockbrokers can help you identify the right brokerage account for you.
  • Be mindful of brokerage fees. These can significantly erode your returns.
  • Consider also investing in mutual funds, which allow you to buy many stocks in one transaction. Here’s our list of the best brokers for mutual funds.
Best Binary Options Brokers 2020:
  • BINARIUM
    BINARIUM

    Best Options Broker 2020!
    Great Choice For Beginners!
    Free Trading Education!
    Free Demo Account 1000$!
    Get Your Sign-Up Bonus Now!

  • BINOMO
    BINOMO

    Only For Experienced Traders!

Like this post? Please share to your friends:
Binary Options Trading Library
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: