Hot Stocks for June 1, 2022 - LULU, TAL, WDAY, ETSY Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was -0.58% ROC for the day.

For the First Trading Day of June, 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 June.

Seasonality for The First Trading Day of June 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 June, which for this year is June 1 and falls on a Wednesday. On the first page of the dashboard, we can pick the top stocks to trade long and the top stocks to short by considering both the Average % Change and Odds data. In this case, we’ll look at Lululemon Athletica, TAL Education Group, Workday Inc, and Etsy Inc.

For the first trading day of June, historically, LULU has 75.0 Odds of going up (which means it has moved higher on this same day 6 out of 8 years on this day), on average +2.55%, and TAL has 87.5 Odds with average moves of +2.22%. On the bearish side, historically, WDAY has 62.5 Odds of going down on average by -1.96%, and ETSY has 66.7 Odds of going down on average by -1.46%.

These numbers are drawn from the previous 8 years for LULU, TAL and WDAY and previous 6 years for ETSY. 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 WDAY and ETSY, which may qualify as shorts, or LULU and TAL, 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.

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 symbols, the latest quarterly earnings are typically released sometime in June (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 June.

LULU Seasonality for June 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Lululemon Athletica's performance for the entire month of June, 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 June compared to LULU which far outperforms the index. Also looking in the right-hand section, we can see the top 8 bullish seasonality signals for LULU. 

The average monthly performance of LULU has averaged +3.9%, with positive performance typically coming from most seasonality windows (First Trading Day, 1^st Friday, Mid-Month, Last 1, 3, 5 Trading Days). This gives indication that LULU’s trading action is typically choppy or bearish in between the given seasonality windows. This, along with looking at how LULU is currently performing this June, can help frame intraday or swing trades for LULU for the month.

LULU’s latest quarterly earnings report is expected to be released on June 2, 2022 after market close. This may have a significant impact in the trading action on June 1.

TAL Seasonality for June 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at TAL Education Group’s performance for the entire month of June, alongside SPY for context.

Looking at the bottom Seasonality Timeline, we can see the historical performance of TAL outperforms the SPY in many seasonality windows, other than mid-month (9^th-14^th trading days). Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for TAL.

The monthly performance of TAL in June has averaged +5.2%, and we can see many seasonality windows contribute to this performance. However, given the lackluster performance for mid-month and negative average performance on the 3^rd Friday of June, this indicates the action in TAL can be choppy and bearish for part of the month. This can all help frame intraday or swing trades for TAL for the month of June, with positive performance expected at the beginning and near the end of the month.

TAL’s latest quarterly earnings report was released on March 29, 2022.

WDAY Seasonality for June 2022

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

Looking at the seasonality Timeline at the bottom, we can see WDAY historically underperforms the index during the first trading day, 3^rd Friday and last 5 trading days of June. Given the average monthly performance of +0.26%, and historical performance during other seasonality windows, this would indicate choppy action for most of June. This can help frame intraday or swing trades for WDAY for other days in the month.

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

WDAY’s latest quarterly earnings report is expected to be released on May 26, 2022, which may have lasting effects in the trading action on June 1.

ETSY Seasonality for June 2022

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

Looking at the bottom timeline, we can see ETSY historically underperforms the SPY during most seasonality windows, apart from the exceptional mid-month outperformance. Given the average monthly performance of +9.9%, this would indicate choppy action during most of June, and bullish action from the 9-14^th days of the month. ETSY also has positive expected performance on May 31, which may provide an opportunity to short premium from that day, through June 1.

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

ETSY released its latest quarterly earnings report on May 4, 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 and exit at the close of the first trading day of June or enter at the Open of the last day of June 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 a statistical 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 or have identified the best fit of hedges and have them standing by. 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 85% 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 outperform the S&P 500 ETF. This can help set the context for June 1 as well.

We refer to the roll from one month into another, the Turn-of-the-Month Effect (TOME). For most of the months in a year, the last day of the month is down and the first day of the next month is up.

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.