Hot Stocks for October 3, 2022 - TSLA, SGEN, TTD, DXCM Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was -3.87% ROC for the day.

For the First Trading Day of October, 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 last trading day, mid-month or 3rd Friday (option expiration) performance. In this case, we’ll look at a few symbols that typically have either bullish or bearish performance on the first trading day of October.

Seasonality for The First Trading Day of October 2022

Using the Free Seasonality Almanac for traders, we can generate seasonality-related ideas for stocks to trade. In this case, we’ll look at the First Trading Day of October, which for this year is October 3 and falls on a Monday. On the first page of the dashboard, we can pick the top stocks to buy long and the top stocks to short by considering both the Average % Change and Odds data. In this case, we’ll look at Tesla, Inc, Seagen Inc, Trade Desk Inc, and DexCom, Inc.

For the first trading day of October, historically, TSLA has 62.5 Odds of going up (which means it has moved higher on this same day 5 out of 8 years on this day), on average +2.95%, and SGEN has 75.0 Odds with average moves of +1.98%. On the bearish side, historically, TTD has 80.0 Odds of going down on average by -2.57%, and DXCM has 75.0 Odds of going down on average by -1.32%.

These numbers are drawn from the previous 8 years for TSLA, SGEN and DXCM, and previous 5 years for TTD. 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 TTD and DXCM, which may qualify as shorts, or TSLA and SGEN, 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 October (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 October.

TSLA Seasonality for October 2022

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

The average monthly performance of TSLA has averaged +0.49%, with positive performance typically coming from the first trading day, mid-month and last 5 trading days in October. Given the negative performance in other seasonality windows, TSLA’s trading activity can be typically somewhat positive for the beginning of the month, while mean-reverting to the average negative performance for the rest of the month. This, along with looking at how TSLA is currently performing this October, can help frame intraday or swing trades for TSLA for the month.

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

SGEN Seasonality for October 2022

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

Looking at the bottom Seasonality Timeline, we can see the historical performance of SGEN outperforms the SPY in only a couple seasonality windows, but especially on the first trading day of October. Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for SGEN for the month.

The monthly performance of SGEN in October has averaged -2.2%, and we can see the first trading day and mid-month contributes most of the typical positive performance, followed by mean-reversion during other periods of the month. This can all help frame intraday or swing trades for SGEN for the month of October, with positive performance expected at the beginning and in the middle of the month.

SGEN’s latest quarterly earnings report is expected to be released on October 27, 2022.

TTD Seasonality for October 2022

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

Looking at the seasonality Timeline at the bottom, we can see TTD historically underperforms the index during most seasonality windows, especially the first trading day in October. Given the average monthly performance of -1.7%, and historical performance during other seasonality windows, this would indicate choppy and mostly negative performance during October, with only one typical period of positive performance for the 1^st Friday. This can help frame intraday or swing trades for TTD for other days in the month.

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

TTD’s latest quarterly earnings report is expected to be released on November 14, 2022.

DXCM Seasonality for October 2022

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

Looking at the bottom timeline, we can see DXCM historically underperforms the SPY during most seasonality windows. Given the average monthly performance of -5.2%, this would indicate bearish action during the most of October, with most of the bullish action usually taking place during mid-month (9^th-14^th trading days). 

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

DXCM’s latest quarterly earnings report is expected to be released on October 27, 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 September and exit at the close of the first trading day of October or enter at the Open on October 3 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!

If trading the above stocks in a combined basket, it is worth considering both longs have some correlation, as well as the 2 short candidates having some correlation from being part of the same sector.

By taking a quick look at the summary numbers at the bottom of the dashboard, we can see that 61% 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 over half the stocks are expected to underperform the S&P 500 ETF on this day. This can help set the context for October 3 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.