Hot Stocks for July 1, 2022 - NFLX, SQ, GOLD, KHC Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was +0.88% ROC for the day.

For the First Trading Day of July, there are many hot stocks projected to move significantly. The StockOdds Seasonality Dashboard provides quick insights for stocks, ETFs, or other securities likely to move in a given seasonality period such as monthly, first or first trading day, mid-month or 3rd Friday (option expiration) performance. In this case, we’ll take a look at a few symbols that typically have either bullish or bearish performance on the first trading day of July.

Seasonality for The First Trading Day of July 2022

Using the Free Seasonality Almanac, we can generate seasonality-related ideas for stocks to trade. In this case, we’ll look at the First Trading Day of July, which for this year is July 1 and falls on a Friday before the July 4 long weekend. On the first page of the dashboard, we can pick the top stocks to long and the top stocks to short by considering both the Average % Change and Odds data. In this case, we’ll look at Netflix Inc, Block Inc, Barrick Gold Corporation, and The Kraft Heinz Company.

For the first trading day of July, historically, NFLX has 75 Odds of going up (which means it has moved higher on this same day 6 out of 8 years on this day), on average +3.42%, and SQ has 80 Odds with average moves of +2.71%. On the bearish side, historically, GOLD has 87.5 Odds of going down on average by -1.13%, and KHC has 100 Odds of going down on average by -1.07%.

These numbers are drawn from the previous 8 years for NFLX and GOLD, and previous 5 years for SQ and KHC. This can be found by hovering your mouse over the expected performance (green and red) bars, as seen below, and looking at the number of Events.

Traders can use this information for context as to the seasonality of GOLD and KHC, which may qualify as shorts, or NFLX and SQ, which may be suitable longs. Traders may want to look at additional Signals for each stock individually before entering a trade to “line up the ducks” with complimentary Odds and average performance for the same day, or even for longer and overlapping periods, based on MFI, Bollinger Bands, Momentum and others. Even better would be checking the Top 10 Odds to see if these show up in the top Odds for the day.

Additional Signals can be found through the Dashboard Reports or through the WebScreener. As we near the end of the month, traders typically look at RSI and %BB values for confirming Odds and average performance.

Before taking these statistics for granted, it is important to look for factors which may have contributed to past performance. For these hot stocks, the latest quarterly earnings are typically released sometime in late July to early August (more details below). When it comes to earnings, there can be cases of “Buying the hype, selling the news,” which also contribute to their Odds and average performance on the first trading day of July.

NFLX Seasonality for July 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Netflix Inc's performance for the entire month of July, alongside SPY for context.

Looking at the bottom of the above screenshot, we can see the historical performance of SPY is slightly positive on the first trading day of July compared to NFLX which far outperforms the index. Also looking in the right-hand section, we can see the top 8 bullish seasonality signals for NFLX. 

The average monthly performance of NFLX has averaged just +2.2%, with positive performance typically coming from the first seasonality windows in July, followed by some mean-reverting action later in the month. This gives indication that NFLX’s trading activity is typically choppy in between the given seasonality windows. This, along with looking at how NFLX is currently performing this July, can help frame intraday or swing trades for NFLX for the month.

NFLX’s latest quarterly earnings report is expected to be released on July 19, 2022.

SQ Seasonality for July 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Block Inc’s performance for the entire month of July, alongside SPY for context.

Looking at the bottom Seasonality Timeline, we can see the historical performance of SQ outperforms the SPY in many seasonality windows, other than the 3^rd Friday and Last 3 Trading Days of July. Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for SQ for the month.

The monthly performance of SQ in July has averaged +12.6%, and we can see many seasonality windows contribute to this performance. Given the performance in the seasonality timeline, this indicates SQ typically has positive performance for the first half of the month and likely trends up outside the given seasonality windows. This can all help frame intraday or swing trades for SQ for the month of July, with positive performance expected at the beginning and near the end of the month.

SQ’s latest quarterly earnings report is expected to be released on August 1, 2022.

GOLD Seasonality for July 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Barrick Gold Corporation’s performance for the entire month of July, alongside SPY for context.

Looking at the seasonality Timeline at the bottom, we can see GOLD historically underperforms the index by a large margin during the first trading day, 1^st Friday and mid-month (9^th-14^th trading days) in July. Given the average monthly performance of -3.9%, and historical performance during other seasonality windows, this would indicate negative performance during the first half of July, followed by choppy action for rest of the month. This can help frame intraday or swing trades for GOLD for other days in the month.

Looking in the right-hand section, we can see the top 8 seasonality signals for GOLD, from bullish to bearish. Since GOLD is a potential short for July, we can refer to these signals to see the least bearish times to trade GOLD stock.

GOLD’s latest quarterly earnings report is expected to be released on August 8, 2022.

KHC Seasonality for July 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at The Kraft Heinz Company’s performance for the entire month of July, alongside SPY for context.

Looking at the bottom timeline, we can see KHC historically underperforms the SPY during a the first few seasonality windows. Given the average monthly performance of +1.1%, this would indicate choppy, muted action during most of July, with most of the bullish action usually taking place during the last 5 trading days of the month. 

Looking in the right-hand section, we can see the top 8 seasonality signals for KHC, from bullish to bearish. Since KHC is a potential short for the First Trading Day of July, we can refer to this section to see seasonality windows that indicate the least bearish performance for the rest of the month.

KHC latest quarterly earnings report is expected to be released on August 3, 2022.

Closing Thoughts

The Seasonality Almanac Dashboard uses close-to-close (CC) performance, so one looking to take these trades has a few options. One could enter positions at the close on the last day of June and exit at the close of the first trading day of July or enter at the Open on July 1 if conditions are favorable. It’s worth considering, with overnight or even intraday trades, even though one has curated a high-probability trade, the market could interfere with its own agenda (that being what is most probable to occur). Most stocks tend to be impacted by larger market moves, so it is an advantage to hedge any trades in some way. Even with this in mind, why trade probability-blind when you can trade hedged, with the Odds!

By taking a quick look at the summary numbers at the bottom of the dashboard, we can see that 84% of stocks in the dashboard that meet our filter criteria have a positive expectation for the first trading day this month. In addition to this, we can also see that well over half the stocks are expected to underperform the S&P 500 ETF on this day. This can help set the context for July 1 as well.

If you’re a trader or investor, then we highly recommend that you take our Seasonality Dashboard course. In this course, not only will you learn more about why seasonality patterns exist and how to better utilize the Seasonal Almanac Dashboard but also have access to exclusive insights from some of the world's leading traders on using probability-based approaches for trading.