Hot Stocks for September 1, 2022 - OSTK, AAL, TSLA, MSFT Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was -0.41% ROC for the day.

For the First Trading Day of September, 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 September.

Seasonality for The First Trading Day of September 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 September, which for this year is September 1 and falls on a Thursday. 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 Overstock.com, Inc, American Airlines, Inc, Tesla, Inc, and Microsoft Corporation.

For the first trading day of September, historically, OSTK 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 +1.98%, and AAL has 85.7 Odds with average moves of +1.10%. On the bearish side, historically, TSLA has 87.5 Odds of going down on average by -1.68%, and MSFT has 75.0 Odds of going down on average by -1.40%.

These numbers are drawn from the previous 8 years for OSTK, TSLA and MSFT, and previous 7 years for AAL. 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 TSLA and MSFT, which may qualify as shorts, or OSTK and AAL, 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 or 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 September.

OSTK Seasonality for September 2022

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

The average monthly performance of OSTK has averaged -1.49%, with positive performance typically coming from the first and last 5-3 trading days in September. Given the negative mid-month performance, OSTK’s trading activity can be typically somewhat positive for the month, while mean-reverting to the average negative performance during mid-month. This, along with looking at how OSTK is currently performing this September, can help frame intraday or swing trades for OSTK for the month.

OSTK’s latest quarterly earnings report was released on July 28, 2022.

AAL Seasonality for September 2022

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

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

The monthly performance of AAL in September has averaged -0.48%, and we can see the first trading day contributes most of the typical positive performance, followed by mean-reversion later in the month. This can all help frame intraday or swing trades for AAL for the month of September, with positive performance expected at the beginning and near the end of the month.

AAL’s latest quarterly earnings report is expected to be released on October 20, 2022.

TSLA Seasonality for September 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 September, alongside SPY for context.

Looking at the seasonality Timeline at the bottom, we can see TSLA historically underperforms the index during the first trading day, 1^st Friday and last 5-1 trading days in September. Given the average monthly performance of -2.3%, and historical performance during other seasonality windows, this would indicate choppy performance during September, with periods of positive performance, such as during the mid-month window. This can help frame intraday or swing trades for TSLA for other days in the month.

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

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

MSFT Seasonality for September 2022

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

Looking at the bottom timeline, we can see MSFT historically underperforms the SPY during a few seasonality windows. Given the average monthly performance of -0.47%, this would indicate choppy, bearish action during the most of September, with most of the bullish action usually taking place during mid-month and the last 1-5 trading days of the month. 

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

MSFT’s latest quarterly earnings report was released on July 26, 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 August and exit at the close of the first trading day of September or enter at the Open on September 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!

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 71% 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 just over half the stocks are expected to outperform the S&P 500 ETF on this day. This can help set the context for September 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.