Hot Stocks for May 2, 2022 - TTWO, HLT, WDC, SLB Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was +0.07% ROC for the day.

For the First Trading Day of May, 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 May.

Seasonality for The First Trading Day of May 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 May, which for this year is May 2 and falls on a Monday. 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 Take-Two Interactive Software, Inc, Hilton Worldwide Holdings Inc, Western Digital Corp, and Schlumberger Limited.

For the first trading day of May, historically, TTWO has 87.5 Odds of going up (which means it has moved higher on this same day 7 out of 8 years on this day), on average +2.12%, and HLT has 85.7 Odds with average moves of +1.29%. On the bearish side, historically, WDC has 75 Odds of going down on average by -2.36%, and SLB has 100 Odds of going down on average by -1.82%.

These numbers are drawn from the previous 8 years for TTWO, WDC and SLB and previous 7 years for HLT. 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 WDC and SLB, which may qualify as shorts, or TTWO and HLT, 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 May (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 May.

TTWO Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Take-Two Interactive Software, Inc's performance for the entire month of May, alongside SPY for context.

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

The average monthly performance of TTWO has averaged +8.9%, with positive performance typically coming from the given seasonality windows (First Trading Day, Mid-Month, Last 5 Trading Days, etc.). This gives indication that TTWO’s trading action is typically choppy or bearish in between (and possibly during) seasonality windows. This, along with looking at how TTWO is currently performing this May, can help frame intraday or swing trades for TTWO for the month.

TTWO’s latest quarterly earnings report is expected to be released on May 16, 2022.

HLT Seasonality for May 2022

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

Looking at the bottom Seasonality Timeline, we can see the historical performance of HLT outperforms the SPY in many seasonality windows, other than the last 1 and 3 trading days of the month. Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for HLT.

The monthly performance of Hilton Worldwide Holdings Inc in May has averaged +2.9%, and we can see many seasonality windows contribute to this performance. However, given the negative average performance on the Last 1 and 3 Trading Days of May, this indicates the action in HLT can be choppy and bearish for last few days of the month. This can all help frame intraday or swing trades for HLT for the month of May, with positive performance expected at the beginning, middle, and near the end of the month.

HLT’s latest quarterly earnings report is expected to be released on May 3, 2022, which may have a significant impact in the trading action on May 2.

WDC Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Western Digital Corp’s performance for the entire month of May, alongside SPY for context.

Looking at the seasonality Timeline at the bottom, we can see WDC historically underperforms the index during seasonality windows at the beginning and end of the month. Given the average monthly performance of -1.68%, and historical performance during other seasonality windows, this would indicate choppy action for most of May. This can help frame intraday or swing trades for WDC for other days in the month.

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

WDC’s latest quarterly earnings report is expected to be released on April 28, 2022, which may have lasting effects in the trading action on May 2.

SLB Seasonality for May 2022

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

Looking at the bottom timeline, we can see SLB historically underperforms the SPY during most seasonality windows, apart from mid-month. Given the average monthly performance of -4.0%, this would indicate bearish action during most of May, and bearish action from the 9-14^th days of the month.

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

SLB is expected to release its latest quarterly earnings report on April 22, 2022.

We have found Seasonality to be reliable and robust overall, but we also acknowledge that certain macro drivers can overwhelm the statistical expectations. In the case of energy-related stocks such as SLB, supply chain and the conflict in Ukraine can interfere. Be mindful of that and watch the sentiment if you intend to trade SLB.

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 day before the first trading day of May and exit at the close of the first trading day of May or enter at the Open of the last day of May 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 74% of stocks in the dashboard that meet our filter criteria have a negative 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. This can help set the context for May 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.