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Stocks To Trade In May

Here are some facts about the DJIA in May:

  • From 1885 to the present:
  • In all months of May: up 55.6% (135)
  • In years ending in one: 38.5% (13)
  • In post-election years: 54.5% (33)
  • In both one and post-election years: 33.3% (6)

Here are the cycles-based trade recommendations for the DJIA stocks in this month. In April, the long trades returned an average of 0.54% versus a rise of 2.71% in the DJIA in comparison to a rise of  0.51% for the short sales. The long trades were favored based upon the expectation of a strong April.

For the month of May, 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 15 were screened as follows. The top 15 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 UnitedHealth Group
UNH
has been trading for 36 years and has risen in 77.78% in all the months of May. The average return has been 4.65% and the expected return is 3.61%.

Average Performance of the DJIA Stocks in the Month of May

Of the top 15, these stocks show strong relative strength and are considered buys for the month:

American Express
AXP
 

Disne
DIS

Home Depot
HD

United Health

VISA

Boeing
BA

Honeywell

Regarding the weakest 15, these stocks show declining relative strength and are suitable short sales:

Nike
NKE
  

Verizon
VZ
  

Walmar
WMT
t  

Procter and Gamble
PG
 

Amgen
AMGN
 

Walgreen-Boots

McDonalds

The indices are likely to fall in May, so the shorts are favored. .

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