Here are some facts about the DJIA in July:
- From 1885 to the present:
- In all months of July: up 63.3% (135)
- In years ending in one: 46.2% (13)
- In post-election years: 72.7% (33)
- In both one and post-election years: 50.0% (6)
These weak seasonals are somewhat offset by strong momentum and excess liquidity. The result will likely be similar to June, a flat market. The first half of the month is likely to be stronger than the second half.
Here are the cycles-based trade recommendations for the DJIA stocks in this month. In June, the long trades returned an average of -.09% versus and a change of -.08% in the DJIA in comparison to a return of -.26% for the short sales. June was certainly a dull month.
For the month of July, 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. 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 22 years and has risen in 72.7% in all the months of July. The average return has been 2.31% and the expected return is 1.68%.
Average Performance of the DJIA Stocks in the Month of July
Of the strongest, these stocks show strong relative strength and are considered buys for the month:
Regarding the weakest, these stocks show declining relative strength and are suitable short sales: