“Sell in May Effect”: Uncovering Investment Opportunities During Seasonal Weakness

Articles From: Seasonax
Website: Seasonax

By:

Cofounder of Seasonax

I’m sure many of you are familiar with the popular market adage, “Sell in May and Go Away”. It’s a catchy saying that has been around for decades. The idea behind it is that stock market returns tend to be weaker during the summer months, from May to October.

In the past issues of Seasonal Insights, we delved deep into this captivating phenomenon by examining the performance of the top eleven stock markets worldwide. Our study has confirmed that a seasonal weakness indeed exists. But the question remains: is it possible to uncover hidden gems during this period, or does the entire industry take a summer siesta?

Summer Stocks

As the summer heat hits, people start craving chilled and revitalizing drinks, making it the perfect season for beverage companies to shine. From soft drinks to sports drinks and bottled water, non-alcoholic beverages tend to witness a surge in sales during this time of the year.

For those seeking to quench their thirst for investment opportunities, Monster Beverage Corporation is a stock to watch out for. The company has already kickstarted its seasonal trend, which typically lasts from March to August, and presents an enticing opportunity to hop on board.

Seasonal Chart of DexCom over the past 10 years

Seasonal Chart of DexCom over the past 10 years

“Sell in May Effect”: Uncovering Investment Opportunities During Seasonal Weakness

Source: Seasonax, for further analysis click on the link http://tiny.cc/Seasonax-MonsterBeverage

Keep in mind that a seasonal chart depicts the average price pattern of a specific asset in the course of a calendar year, calculated over several years (unlike a standard price chart that simply shows prices over a specific time period). The horizontal axis depicts the time of the year, while the vertical axis shows the % change in the price (indexed to 100). The prices reflect end of day prices and do not include daily price fluctuations.

Over the past decade, from April 28 to August 15, the company has boasted an impressive average return of over 14%. What’s more, this trend has proven to be consistently profitable since 2013, except for a loss of 2.96% that the stock printed in 2019. However, it’s important to remember that the stock market is unpredictable and past performance is not a guarantee of future success.

With the onset of summer, the demand for travel and outdoor activities also increases. Companies that manufacture or sell outdoor recreational products such as sporting goods, camping equipment and bicycles, may see increased sales during this time. Look for companies with innovative products or services that can cater to the growing demand for outdoor experiences.  Dick’s Sporting Goods is one such companies that has been consistently capitalizing on this seasonal trend. In recent years, the company’s stock price has shown a strong upward trend, rising by an average of around 21% from mid-May to mid-September. Please click on the following link http://tiny.cc/DicksSportingGoods to access the interactive chart.

However, staying healthy is also a year-round concern, especially for individuals with diabetes. During the summer months, when warmer weather and increased outdoor activities can impact blood sugar levels, monitoring glucose levels becomes even more crucial. This is where DexCom comes in.

DexCom dominates the market as a leader in providing continuous glucose monitoring systems for people with diabetes, with a strong performance history during the summer months.

Seasonal Chart of DexCom over the past 10 years

Seasonal Chart of DexCom over the past 10 years

Source: Seasonax, for further analysis click on the link http://tiny.cc/Seasonax-WW

Looking at the seasonal chart above, over the past 10 years the time period from May 23 until August 26 has been more than favorable. In the short time span of 66 trading days, shares of this health giant rose on average by almost 33%. Moreover, since 2013 the pattern returns had a winning strike of 100%, making this stock even more interesting for future investment.

Enter the world of seasonal opportunities

Despite the seasonal weakness that is often associated with the summer months, there are still market opportunities waiting to be uncovered. While the “Sell in May and Go Away” adage may hold some truth, it cannot be applied universally as a one-size-fits-all strategy.

By digging deeper, into specific industries and sectors that thrive during the summer months, investors can uncover hidden gems that have the potential to defy the seasonal weakness and generate strong returns. As always, thorough research and careful analysis are essential when selecting stocks for investment, regardless of the season.

Therefore, start leveraging Seasonax to identify the optimal entry and exit points based on recurring patterns. By signing up for free at https://app.seasonax.com/signup, you can access over 25,000 instruments, encompassing various sectors, stocks, (crypto)currencies, commodities, and indices.

Remember, don’t just trade it, Seasonax it!

Originally Posted April 24, 2023 – “Sell in May Effect”: Uncovering Investment Opportunities During Seasonal Weakness

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Disclosure: Seasonax

Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. Seasonax GmbH neither recommends nor approves of any particular financial instrument, group of securities, segment of industry, analysis interval or any particular idea, approach, strategy or attitude nor provides consulting nor brokerage nor asset management services. Seasonax GmbH hereby excludes any explicit or implied trading recommendation, in particular, any promise, implication or guarantee that profits are earned and losses excluded, provided, however, that in case of doubt, these terms shall be interpreted in abroad sense. Any information provided by Seasonax GmbH or on this website or any other kind of data media shall not be construed as any kind of guarantee, warranty or representation, in particular as set forth in a prospectus. Any user is solely responsible for the results or the trading strategy that is created, developed or applied. Indicators, trading strategies and functions provided by seasonax GmbH or on this website or any other kind of data media may contain logical or other errors leading to unexpected results, faulty trading signals and/or substantial losses. Seasonax GmbH neither warrants nor guarantees the accuracy, completeness, quality, adequacy or content of the information provided by it or on this website or any other kind of data media. Any user is obligated to comply with any applicable capital market rules of the applicable jurisdiction. All published content and images on this website or any other kind of data media are protected by copyright. Any duplication, processing, distribution or any form of utilisation beyond the scope of copyright law shall require the prior written consent of the author or authors in question. Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results. Testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.

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