EB Monthly Seasonality Report - August 2024

A Look Back At July Stocks:

More than a month ago, we provided a list of the Top 20 stocks that had strong historical track records during the month of July. Here are how they performed in July 2024, in order of best to worst performer:

• ODFL: +19.01%
• GNRC: +17.70%
• IQV: +16.57%
• EPAM: +14.42%
• PYPL: +13.36%
• ETSY: +10.44%
• TDY: +8.71%
• AMGN: +5.66%
• CTLT: +5.52%
• AAPL: +5.32%
• CMI: +5.31%
• REGN: +2.68%
• CF: +2.42%
• MPC: +1.58%
• ISRG: -0.05%
• ANET: -1.14%
• PANW: -4.21%
• GOOGL: -5.82%
• META: -5.83%
• ASML: -8.41%

The percentages represent the returns from the June 30th close to the July 31st close. The average performance of all 20 stocks (+5.16%) easily outperformed both the S&P 500 (+1.21%) and the NASDAQ 100 (-1.68%). Our biggest July winner was ODFL, a trucker ($DJUSTK). ODFL's July strength was nothing more than a trip up to fill its recent price gap. However, keep an eye on transports ($TRAN) and the ODFL:$DJUSTK relative strength resistance level shown below:

ODFL could become a leader heading towards year end, but it needs to clear the gap resistance zone on its absolute chart, the 0.120 resistance level relative to its trucking peers, and I'd want to see transports make a definitive breakout above 16300 or so. That trio of positive signals would be very bullish for ODFL.

S&P 500 August Performance

Here's a breakdown of the annualized performance of the S&P 500 (since 1950) during the month of August, providing you the historical pockets of strength and weakness:

• August 1-3: +9.77%
• August 4-10: -13.55%
• August 11-17: +16.34%
• August 18-28: -6.30%
• August 29-31: +4.88%

August tends to be a very boring month, with very little strength or weakness throughout the month. The average August performance since 1950 is -0.13%, almost squarely flat.

Sector Performance

Before we look at individual stocks, let's get an overview of how the various sectors and industries have performed during August over the past 12 years (during this secular bull market):

Seasonal tendencies helped me identify sector winners in April, May, and June. Heading into July, this is what I had to say regarding expected performance of key sectors/industries, based solely on historical tendencies:

So what might we see in July? History says we should be looking for further strength in consumer discretionary and perhaps more gains in technology as earnings season kicks into high gear once again. But July is not a great month for semiconductors, so the recent weakness there may very well continue. Computer hardware ($DJUSCR) and broadline retail ($DJUSRB) are a couple areas to watch closely. I see higher prices likely in both.

Well, both the XLK and XLY got off to a great start in July, but the XLK saw notable weakness after the June CPI report was released on July 12th. The XLY also weakened, but did finish higher for the month and outperformed our key indices. We'll have to settle for 1 out of 2. Seasonality did tell us to be careful with semiconductors and they struggled throughout much of July, so chalk that one up to historical tendencies. Computer hardware was solid and outperformed, while broadline retail underperformed. All in all, history provided us good information in July, though certainly not perfect.

I realize that two-thirds of August is now over, but I'll still share what history has to say about the month with respect to sector performance.

Technology is typically led higher by computer hardware ($DJUSCR) in August. Apple (AAPL) has shown a tendency to perform very well in July and August. Here's an AAPL seasonality chart for the past 12 years, during the current secular bull market advance:

Software ($DJUSSW) has also provided technology a lift during August over the years.

Industry Performance

Here are all industry groups that tend to perform much better than the benchmark S&P 500 during August:

Technology (XLK):

• computer hardware, software

Consumer Discretionary (XLY):

• automobiles, apparel retailers, home improvement retailers, recreational services, travel & tourism

Communication Services (XLC):

• none

Industrials (XLI):

• defense

Financials (XLF):

• reinsurance, mortgage finance

Health care (XLV):

• none

Consumer staples (XLP):

• food retailers & wholesalers

Real estate (XLRE):

• none

Utilities (XLU):

• none

Energy (XLE):

• coal

Materials (XLB):

• none

Stocks for August

We've selected our Top 20 seasonal stocks for August. Several names represent sectors and industry groups that have been discussed above. Others simply stand out in August based on their own historical track record.

The stocks this month, with average August performance, are as follows:

• PAYC: +14.0%
• TTD: +13.2%
• DXCM: +9.5%
• CZR: +7.8%
• WDAY: +7.2%
• NVDA: +7.2%
• PODD: +6.9%
• TSLA: +6.8%
• MELI: +6.5%
• EPAM: +5.8%
• MTCH: +5.8%
• ANET: +5.7%
• CRM: +5.4%
• HUM: +4.9%
• INCY: +4.9%
• AAPL: +4.7%
• BLDR: +4.4%
• BR: +3.9%
• CF: +3.9%
• BKNG: +3.8%

A "Seasonality - August 2024" ChartList (annotated with 1 or 2 support levels to watch) will be created and will be available for viewing/download by late Wednesday. You must be a StockCharts.com Extra or Pro member to download our ChartLists. Basic members and non-StockCharts.com members can view the charts one at a time.

I'll be sending out the September Seasonality Report sometime over the next 2-3 days in order to give everyone plenty of time to prepare for next month.

Happy trading!

Tom