June has traditionally been the second weakest month after September. This observation derives from the Dow Jones average back to 1885. Analysis of the S&P 500 over more recent years suggests a more positive tone to this month. I am leaning toward the latter and more bullish interpretation.
For this month, the cycle/relative strength concept is applied. First, the Dow Jones 30 stocks are ranked from the best performer to the worst by calculating the expected return in that month. The top stocks were screened as follows. 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.
This process has been applied to the Dow Jones 30 stocks by buying the top 5 rated stocks and by shorting the 5 lowest rated stocks. From January of 2020, the top five long stocks have risen by an amount about 53% greater than that of the short sales and 29% over the DJIA. The short sales were net negative over that time period at -11%.
Here are the top five long recommendations for this month:
Boeing
Microsoft
Cisco
Walmart
United Health
Here are the top five short recommendations for this month:
Walgreen Boots
Disney
Amgen
IBM
MMM
Boeing is the most highly-rated buy in the DJIA. There are higher lows in momentum and absolute and relative price, constructive conditions.
Microsoft is ranked second overall. It is ranked two for relative strength and is also well-rated for June performance. Below, we can see that the relative strength is hitting new highs.
Boeing Daily
Microsoft Daily
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