Buy Apple And Sell Short Monster Beverage

Photo by Drew Angerer/Getty Images

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The market has been unusually volatile for this usually bullish seasonal period. The S&P 500 is likely to open up the coming week on the downside through Tuesday. At that point, the bullish holiday seasonality takes effect. In the 3 trading days on either side of Christmas, the market has risen about two-thirds of the time. If the averages have risen in the calendar year prior to this time span, the odds are even higher. We will look at stocks that have done well in the coming week and those that have done well in the six-day holiday period.  

Here is a screen of S&P stocks that have performed best in that period. To select some stocks for short-term trades, the following strategy is employed. The best-performing stocks in the chosen time period with at least 20 years of price data are calculated and are presented below. The stocks are ranked by the percentage of time periods in which the stock rose.

Apple has risen 75% of the time. The return has been 3.25% and the expected return (the product of the first two numbers) is 2.44%. The stock has been trading for 40 years.

Best Performing S&P 500 Stocks from December 17th to December 24th  

These stocks have been the best performers in the coming week.

Cycles Research Investments LLC

From this list, the stocks are screened for relative strength and by dynamic cycles. The latter term refers to the most active cycles that are generating profits now

Apple is ranked fifth. The share price has held up better than most NASDAQ stocks. From the 15th through the 28th, the stock has risen 70% of the time for an average gain of about 4%.  

The stock is likely to rise closer $180 by the end of this seasonally strong period.

Chart 1

Relative strength has been excellent.

Cycles Research Investments LLC

Looking at the other end of the spectrum for stocks that have seasonally been weak, we see that Monster Beverage has lagged. The stock has been down about 65% of the time. The last week of December has been bearish. The 28th has been one of the weakest days in any year, down 74% of the time for an average loss of about 4.8%. The stock is likely to retreat closer to $85.

Chart 2

The stock is showing a momentum sell signal.

Cycles Research Investments LLC