For this month, the cycle/relative strength concept is applied. First, the S&P 500 stocks are ranked from the best performer to the worst by calculating the expected return in that month. The top best traditional performers in the month were then screened for relative strength by a unique measure that sorts by several relevant time periods. Those that pass both screens are buys for the month. The stocks that are both weak monthly performers and weak relative performers are short sales for the month.
The markets are expected to be weak in June.
Back test testing of the S&P 500 stocks that have at least 30 years of data reveals that, since January of 2022, the top five long stocks have outperformed the short sales by 112%, and have exceeded the S&P 500 by 51%. The short sales fell by about 30%.
Here are the top five long recommendations for this month:
Citigroup-C
Costco-COST
Progressive-PGR
Eli Lilly-LLY
Johnson Controls-JCI
Here are the top five short recommendations for this month:
Old Dominion Freight Line-ODFL
Intel-INTC
Evergy, Inc.-EVRG
V.F. Corporation-VFC
PENN Entertainment-PENN
Citigroup is the highest-ranked stock. In the three-up chart, we see reversals of long relative strength downtrends. Note the higher lows in monthly momentum. The monthly cycle has lifted the share price and is likely to continue to do so.
Citigroup Daily, Weekly, Monthly
Citigroup Monthly Cycle
Old Dominion Freight is again a shorting candidate. However, the stock was recommended last month and has fallen 5.3%
Penn Entertainment appears ripe as a short sale. The stock has been weak technically and the monthly cycle peaks now. Relative strength continues to hit new lows. There are no buy signals on any of the three time frames. June has been the second-weakest month in any year for the share price. The monthly cycle peaked recently and the share price has matched the cycle, running up to the cycle peak and now resuming its downtrend. Sell short.
Penn Entertainment Daily, Weekly, Monthly
Penn Monthly Cycle
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