Reminder: Tonight @ 6PM ET is our LIVE Conference Call for Premium Members of ASC Research. This is where walk through the most important trends and share our best ideas to profit from the current sector rotation that is dominating these markets.
As a Premium Member, you also get complimentary access to our 12-week Mastermind. This week is all about Why Momentum Works and How To Profit From It.
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When you look back at market history, investors don't take favorably to the start of the Jewish new year - Rosh Hashanah.
It's not until after Yom Kippur, that the market tends to get going again - and that's not until the end of next week. (See: Stock Traders' Almanac)
Like all the seasonal studies, we don't literally adjust our portfolios just because stock tend to do poorly during this period, hence the old saying, "Sell Rosh Hashanah, Buy Yom Kippur".
I'm more interested in looking back afterwards to see if the market went with seasonal tendencies or if the market ignored them.
I'm way more interested when the market ignores them.
This is a similar concept to what happened last month, for example.
September is supposed to be the worst month of the year for stocks. But all the major indexes were up. In fact, they were up well over their average monthly return, regardless of which month you picked.
It exceeded the average returns for even the best months historically.
So when markets ignore seasonal weakness, I pay more attention.
We saw this sort of strength come in before the 2016 election as well. And while the media was telling you that a Trump victory was bad for stocks and would lead to a volatile market, it turned out to be the exact opposite.
After Trump was elected president in 2016, the market went on to have one of the greatest, least volatile years in stock market history.
And the strength in stocks going into that election, during a time of historic seasonal "weakness", was a heads up that the angry media outlets were just acting emotionally instead of rationally using sound data.
Taking this all one step further, I keep being told that there is this "defensive" rotation going on in stocks, just because Utilities have been a leader.
For the record, Utilities have been leaders during bull markets before. There is precedent to it and doesn't mean the market is bearish.
In fact, look at the returns from last quarter. How could it possibly be defensive rotation when Financials, Industrials and Consumer Discretionary were all up double digits?
This is the exact opposite of defensive:
And sticking with that theme of Consumer Discretionary, there are few sectors that are more important to the market, especially right now.
With Technology underperforming this year, and actually flat last quarter despite all the strength everywhere else in equities, Consumer Discretionary is the only sector with the ability to drive that high beta trade.
In healthy markets you tend to see High Beta outperforming its Low Volatility counterparts. But Technology carries the largest weighting in High Beta.
Discretionary, on the other hand, has the 2nd largest weighting in that factor.
And just when the bears thought Consumer Discretionary was completing a massive decade long top relative to S&Ps, which would effectively end this bull market, the buyers stepped up when they had to.
Look at the largest weightings in Discretionary.
They haven't even gotten going yet. And they're also not completing tops.
Take a look at Amazon, Tesla and Home Depot, which together represent almost half the entire Discretionary Index.
They're all completing bases and carving out structural bottoms.
With this rotation comes opportunity.
And tonight we'll be talking about all the ways we want to profit from these trends.
At 6PM ET, I will be hosting our Monthly Charts Strategy Session that we do at the beginning of every month for Premium Members of ASC Research.
This is where we walk through all of the most important trends, which industries were more focused on, and specifically which stocks were buying to express a bullish thesis in those areas.
I will give you my 3 best ideas tonight to profit in October.
