Welcome back to a brand new trading week, month, and quarter.
It’s been a rough ride in the markets – especially for those chasing capital gains. Here’s how the damage to the indexes played out over the quarter:
- The S&P 500 is down 3.6%
- The NASDAQ is down 4.1%
- The Dow Jones is down 2.6%
- The Russell 2000 is down 5.5%
There’s good news, though.
The fourth-quarter is generally the strongest quarter of the year for the stock market – and even more so in pre-election years.
And if you look at data for the S&P 500 going back to the 1950s…
When the S&P 500 is still up between 10–20% for the year by end-September, markets typically end the fourth quarter over 5% higher close to 85% of the time.
And when the S&P 500 is down over 1% in both August and September, markets typically end the fourth quarter over 7% higher more than 90% of the time.
All of these conditions have been met – so there are a lot of “seasonal factors” supporting a fourth-quarter rally.
And it’s always worth hammering this point…
Just because the market is falling doesn’t mean individual stocks can’t go up.
So as always, to start the first trading day of the week…
I’ll be spotlighting three stocks that still have strong positive momentum – and have a great chance of continuing to surge this week.
And if the fourth quarter rally thesis is realized, they could soar even more.
So, to welcome the first trading day of the week (and month, and quarter).
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MillerKnoll, Inc. (MLKN)
MLKN is the company that makes the premium furniture brand Herman Miller. Last Wednesday, its stock “gapped up” (aka opened far higher than the previous day’s closing price) – by nearly 25%. The reason for this big move was the company upwardly revising its FY2024 forecasts above expectations.
But that’s not the only reason this stock is on today’s list. You see, after “gapping up”, MLKN stock is now trading slightly above the resistance level formed by the highs of November 2022, February 2023, and March 2023.
And although it’s been a few days since that big gap up, MLKN has still managed to maintain that range. This is a good sign that what was once previous resistance could now serve as support – a base for the stock to keep moving higher.
Peabody Energy Corporation (BTU)
Coal miner BTU saw its stock take a steep dive from the middle of April to the beginning of June this year on the back of weak coal prices and declining net earnings. Since then, however, BTU has been slowly climbing back up – and last week, its stock rose by13% after several positive analyst upgrades.
The price action looks sweet on this one. It already had good momentum since June, and this latest catalyst looks sustainable, with the biggest gain happening on Thursday, but with the positive momentum also carrying into Friday. Always a good sign when a stock makes a big jump and the next move is still for it to continue upward.
Hallador Energy Company (HNRG)
HNRG is another coal miner, but with a market cap of under $500 million, it’s about seven times smaller compared to BTU.
But its price action is even better than BTU, blowing past its previous high at the end of August and ripping higher on strong volume (it gained 15.5% last week). It’s currently trading at multi-year highs – and the trend is looking strong.
This is a stock with clear momentum on its side. And with a small market cap, the gains it could deliver could be very lucrative.
To your wealth,
Felix @ Ace of Investing