Hot Stocks for May 31, 2022 - TDOC, ETSY, SPLK, TSN Seasonality

UPDATE: the actual performance of this trading basket, on a capital-balanced basis, was +0.36% ROC for the day.

For the Last Trading Day of May, there are many hot stocks projected to move significantly. The StockOdds Seasonality Dashboard provides quick insights for stocks, ETFs, or other securities likely to move in a given seasonality period such as monthly, first or last trading day, mid-month or 3rd Friday (option expiration) performance. In this case, we’ll take a look at a few symbols that typically have either bullish or bearish performance on the last trading day of May.

Seasonality for The Last Trading Day of May 2022

Using the Free Seasonality Almanac, we can generate seasonality-related ideas for stocks to trade. In this case, we’ll look at the Last Trading Day of May, which for this year is May 31 and falls on a Tuesday after a long weekend (markets are closed May 30). On the first page of the dashboard, we can pick the top stocks to trade long and the top stocks to short by considering both the Average % Change and Odds data. In this case, we’ll look at Teladoc Health Inc, Etsy Inc, Splunk Inc, and Tyson Foods Inc.

For the last trading day of May, historically, TDOC has 80 Odds of going up (which means it has moved higher on this same day 4 out of 5 years on this day), on average +1.64%, and ETSY has 66.7 Odds with average moves of +1.21%. On the bearish side, historically, SPLK has 62.5 Odds of going down on average by -2.11%, and TSN has 87.5 Odds of going down on average by -1.74%.

These numbers are drawn from the previous 8 years for SPLK, TSN, previous 6 years for ETSY and previous 5 years for TDOC. This can be found by hovering your mouse over the expected performance (green and red) bars, as seen below, and looking at the number of Events.

Traders can use this information for context as to the seasonality of SPLK and TSN, which may qualify as shorts, or TDOC and ETSY, which may be suitable longs. Traders may want to look at additional Signals for each stock individually before entering a trade to “line up the ducks” with complimentary Odds and average performance for the same day, or even for longer and overlapping periods, based on MFI, Bollinger Bands, Momentum and others.

Additional Signals can be found through the Dashboard Reports or through the WebScreener. As we near the end of the month, traders typically look at RSI and %BB values for confirming Odds and average performance.

Before taking these statistics for granted, it is important to look for factors which may have contributed to past performance. For these hot stocks, the latest quarterly earnings are typically released sometime in May (more details below). When it comes to earnings, there can be cases of “Buying the hype, selling the news,” which also contribute to their Odds and average performance on the last trading day of May.

TDOC Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Teladoc Health Inc's performance for the entire month of May, alongside SPY for context.

Looking at the bottom of the above screenshot, we can see the historical performance of SPY is slightly negative on the last trading day of May compared to TDOC which far outperforms the index. Also looking in the right-hand section, we can see the top 8 bullish seasonality signals for TDOC. 

The average monthly performance of TDOC has averaged +8.8%, with positive performance typically coming from the very beginning of the month, as well as end of the month. This gives indication that TDOC’s trading action is typically choppy or bearish for the latter half of May. Given TDOC’s overall retreat off its highs, the seasonal performance, along with looking at how TDOC is currently performing this May, can help frame intraday or swing trades for TDOC for the month.

TDOC’s latest quarterly earnings report was released on April 27, 2022.

ETSY Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Etsy Inc’s performance for the entire month of May, alongside SPY for context.

Looking at the bottom Seasonality Timeline, we can see the historical performance of ETSY outperforms the SPY in many seasonality windows. Also looking in the rightmost section, we can see the top 8 bullish seasonality signals for ETSY.

The monthly performance of Etsy Inc in May has averaged +5.1%, and we can see many seasonality windows contribute to this performance. Given the strong positive average performance on the Last 1, 3 and 5 Trading Days of May, this indicates the action in ETSY can be choppy and bearish the first half of the month. In addition to it’s positive expected performance for the last trading day of May, negative performance is expected on the first trading day of June. This can all help frame intraday or swing trades for ETSY for the month of May, with positive performance expected mostly in last week of the month.

ETSY’s latest quarterly earnings report was released on May 4, 2022.

SPLK Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Splunk Inc’s performance for the entire month of May, alongside SPY for context.

Looking at the seasonality timeline at the bottom, we can see SPLK historically underperforms the index during the last 5, 3 and 1 trading days of the month. Judging by the average monthly performance of +1.98%, along with the other seasonal timeframes, SPLK can be expected to be somewhat choppy for most of the month. This can help frame intraday or swing trades for SPLK for other days in May.

Looking in the right-hand section, we can see the top 8 seasonality signals for SPLK, from bullish to bearish. Since SPLK is a potential short for May, we can refer to these signals to see the least bearish times to trade SPLK stock.

SPLK’s latest quarterly earnings report is expected to be released on May 25, 2022. This can have a large impact on the symbol’s performance for the days leading up to the release, as well as the days that follow.

TSN Seasonality for May 2022

Navigating to the second page of the Seasonality Almanac, we can take a closer look at Tyson Foods Inc’s performance for the entire month of May, alongside SPY for context.

Looking at the bottom timeline, we can see TSN historically underperforms the SPY in the last 5, 3 and 1 trading days of May, while only slightly underperforming for the month as a whole (-0.15%). This gives an indication that for the month of May, TSN’s poor performance is coming from the last 5 trading days. 

 TSN’s latest quarterly earnings report was released on May 9, 2022.

Closing Thoughts

The Seasonality Almanac Dashboard uses close-to-close (CC) performance, so one looking to take these trades has a few options. One could enter positions on the second-last trading day of May and exit at the close of the last trading day or enter at the Open of the last day of May if conditions are favorable. It’s worth considering, with overnight or even intraday trades, even though one has curated a high-probability trade, the market could interfere with its own agenda (that being what is most probable to occur). Most stocks tend to be impacted by larger market moves, so it is an advantage to hedge any trades in some way. Even with this in mind, why trade probability-blind when you can trade hedged, with the Odds!

By taking a quick look at the summary numbers at the bottom of the dashboard, we can see that 75% of stocks in the dashboard that meet our filter criteria have a negative expectation for the last trading day this month. In addition to this, we can also see that over half the stocks are expected to outperform the S&P 500 ETF. This can help set the context for May as well.

If you’re a trader or investor, then we highly recommend that you take our Seasonality Dashboard course. In this course, not only will you learn more about why seasonality patterns exist and how to better utilize the Seasonal Almanac Dashboard but also have access to exclusive insights from some of the world's leading traders on using probability-based approaches for trading.