As the market continues to climb, I’m trying to squeeze out all of the gains that I can get by adding more and more long positions to offset the ever-dropping short positions that I currently hold. In the month of March, I have already been stopped out of 5 short positions for an average of a 17% loss.Thankfully, most of the damage was done in February, and I still edged out the market overall for the month. I have also sold 7 long stocks for an average of about 7.25% gains this month, so it almost evens out. For March alone, the average closed position return has been a positive 3%.
Anyway, the stocks that I am buying today are some more seasonal positions, which have done pretty well so far (sold 2 for gains and currently holding a third, Bed Bath and Beyond (BBBY), which is positive at the moment).
The first stock is CSX Corp (CSX). Between March 3 and April 15 of the past 10 years, it has returned an average of +10.98%, and the lowest dip it has ever taken within that date range is -10.58%. When the average gain more than evens out the worst intra-range dip, it’s a pretty rare opportunity. The highest return that it has produced in the time frame is 32.14%.
The second stock is Avalonbay Communities, Inc. (AVB). The holding range for this stock is March 4th to April 22nd. I will be looking for an earnings run up, which means that the stock should gain some momentum before its report, which will occur some time around April 27th. The average gain for the past 10 years has been 9.93%, the largest was 42.16%, and the lowest dip that it has seen within the date range is -9.51%. Overall, it is an extremely safe stock, as it pays a 3.2% dividend and only carries a 0.25 beta (hardly correlated with the market).
The third stock is NewMarket Corporation (NEU). The holding range for this stock is March 4th to March 25th. This one doesn’t have to do as much with earnings, as it does not report until the end of April. However, it is the best performer out of this group, averaging a 13.75% return over the past 10 years. For whatever reason, it almost always goes up in March, so it looks like a reliable buy. It’s also another defensive stock with a sub-1 beta, which lessens the risk in buying it for a few weeks.
The fourth stock is Big Lots Inc. (BIG). The seasonal range for Big Lots is March 4th to March 23rd, as it is more of an earnings play than anything else. In fact, the company reported earnings this morning and it already up about 4%. It is also the least risky of the bunch, and may be one of the least risky seasonal plays out there. Over the past 10 years, it has yielded an average of 13.44% during this time range, the highest being 40.3%, and has only dropped -3.77% at any point within the couple of weeks’ holding period.
Trading Through Trends 