September has been the weakest month in any year. From 1885, the DJIA has been up in 47.4% of Septembers. The month has tended to be down despite the performance in August. A down August has not boosted the odds for September. The month has also been down in years ending in 3 and in pre-election years.
The sectors have been rated by relative strength and by cycles. The Energy Sector ETF, XLE
XLE
Screening the energy sector, these stocks stand out. SM Energy engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in Texas. In the energy sector, the stock is ranked sixth for both relative strength and seasonality.
Monthly, the stock appears to have good longer-term prospects. Note that the relative strength bottomed in 2020. The momentum turned up this year at a higher level from its prior low. Monthly, the expected return is historically positive for each of the next six months. The monthly cycle rises into April. The stock is likely to challenge the old high and trade in the $50-$55 range by yearend.
SM Energy-Monthly Cycle
SM Energy-Monthly Cycle
Callon Petroleum Company, an independent oil and natural gas company in West Texas. The stock is ranked second in the Cycles Research screen for the energy sector in the month ahead.
September has been the second strongest month after March. The stock has risen 69% of the time for a gain of almost 7%. We can see in the weekly chart that the share price has broken out of a formation to the upside. There are higher lows in momentum, and relative strength has broken its downtrend. The $48-$50 area is a reasonable target by yearend.
Callon Petroleum Weekly
Callon Petroleum Monthly Histogram
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