If you’ve ever gone fishing before, you know it can be an immensely frustrating endeavor. (That is, assuming your main goal is to catch a fish… not just drink beer and pass time).
The vastness of the ocean is one major challenge. So too is the fact that you can’t often see the prey you’re trying to capture.
But seasoned fishermen don’t just cast their lines and hope for the best. They actively seek out the best spots… they hunt for “high-probability” areas, where their odds of success are better than 50/50.
And that’s what successful investors do, too.
Last week, I addressed the “Sell in May and Go Away” adage and showed that defensive sectors have historically been a high-probability bet between May and October.
This week, I shared with Cycle 9 Alert subscribers a more detailed analysis of sector trends during the summer months.
Basically, I ran a study that showed the results of buying $10,000 worth of each sector at the beginning of May and holding for three months. All sectors faced headwinds during this time of the year, but the Consumer Staples and Health Care sectors held up the best.
Out of all 500 stocks in the S&P 500, only 49% of them (just under 250) have historically produced a positive gain between May and August.
If you look at only the Consumer Staple and Health Care stocks, which are components of the S&P 500… 67% of those individual stocks produced positive gains during that period.
That’s a big difference! And it validates the idea that it pays to go fishing in these defensive sectors during the summer months, when the odds of a positive outcome are far better than 50/50.
Of course, seasonality is only one of the four components of my Cycle 9 Alert strategy. And currently, the Consumer Staples and Health Care sectors do not meet the other criteria required for a Cycle 9-style options play.
But that might change as we get deeper into the summer months… so I have my eye on these sectors, watching for potential buy triggers.
Stay tuned as I send updates in the coming weeks… or join Cycle 9 Alert to gain immediate access to this detailed analysis and future trade recommendations.