This Year's November Buy to Remember

The Q4 thrust is almost here… [TradeSmith Daily logo] [TradeSmith Daily logo] October 17, 2024 This Year's November Buy to Remember By LUCAS DOWNEY, CONTRIBUTING EDITOR, TradeSmith Daily Last week we were front and center about [the likelihood of October choppiness]( especially during election years... And the bobbing and weaving came right on time. As I write this on Tuesday midday, the NASDAQ is down 1%, with plenty of semiconductor stocks off a lot more. If you’re inclined to sit on the sidelines this October… we don’t blame you. Just don’t sit out for long! November kicks off bullish season for stocks. Readers of TradeSmith Daily heard about this seasonal trend last year when we wrote how you should [always remember to buy in November](. At the time, the crowd was scared and fearful... But because we analyzed history, we easily took the other side. Sure enough, last October marked the bottom in the S&P 500, with both it and the NASDAQ 100 each up roughly 42% from the lows. Today we’ll add to this seasonal tendency by highlighting one less-covered area set to thrive: Mid-cap stocks. The Great Equalizer Trade Includes Mid-Caps We’ve been all over the massive [rotational equalizer trade]( since the summer. Today that narrative is getting reinforced with mid-cap companies in our crosshairs. You hear the terms small-caps and large-caps a lot in the financial media. The middle-ground stocks, though, don’t get much mention. Historically, firms with market capitalizations between $2 billion - $10 billion are referred to as mid-caps. But as the stock market has grown in size over time, mid-caps also encompass $20 billion values as well. This is a great hunting ground for tomorrow’s leading stocks, because firms that graduate from small-cap status to mid-cap are on their way to becoming a prized large-cap. Since the great equalizer rotation began on July 11, mid-caps as expressed by the SPDR S&P Midcap 400 ETF (MDY, green line below) have beaten the SPDR S&P 500 ETF (SPY, blue line) and NASDAQ 100 (QQQ, orange line). On a three-month basis, MDY is up 5.21% while the tech-heavy QQQ is barely above the flat line: And there’s reason to believe this recent outperformance is set to continue. By using the same framework as last year’s study, we’ll expand it to other market capitalization indices. Let’s recap the study... Always Remember to Buy Midcaps in November You’ve likely heard the old Wall Street adage, “Sell in May and go away.” Turns out there’s some truth to this saying. Since 1995, in the six-month period of May – October, the S&P 500 gains on average just 2.1%. Given that the market tends to average 10% annual returns going back decades, this half-year period is well below average. 2024 is an outlier, as the large-cap index is up 16.77% from the start of May through Oct. 14. If it holds through month-end, it’d be the best May-October performance since 2009! And when you review historic stats on the six-month period beginning November – April, you’ll understand that even better days are likely around the corner. It’s an exceptionally bullish time… especially for mid-caps. In the nearly three-decade period from 1995 – 2024, the average November – April returns for four major indices – the S&P 500, the NASDAQ 100, the S&P Small Cap 600, and the S&P Mid Cap 400 – are as follows: - The S&P 500 gained 7%, on average. - The S&P Small Cap 600 lifted 8.35%. - The NASDAQ 100 vaulted 9%. - The S&P Mid Cap 400 ripped 9.35% higher. That’s a sizable bullish opportunity ahead compared to May-October. One way to play this big lift for mid-caps is with the SPDR S&P Mid Cap 400 ETF (MDY). But I believe you can do better… a lot better. And this is where being armed with TradeSmith’s arsenal of tools comes in handy... SPONSORED AD [Buy Alarum Technologies (ALAR) Immediately]( [image]( October 21 could spark a mania among “next-generation” AI stocks. That’s the newest prediction from a Wall Street legend who predicted the dot-com mania, the 2020 boom, and found Nvidia before it rose up to 37,000%. To play this event, he’s issuing an urgent recommendation. [Read his briefing here by October 21.]( Top Mid-Cap to Keep on Your Radar High-ranking stocks tend to crush market averages, and that’s certainly been true of building products firm Carlisle Companies (CSL). If you’ve followed my writing for any amount of time, you’ll know I am a firm believer in the [rebuilding needs]( across this country. And weatherproofing is where Carlisle comes into play. Their metal roofing, heating, ventilation and air conditioning (HVAC) products, waterproofing and sealing products make them a top choice for this theme. Sales have been booming recently, too. In 2021, revenues stood at $3.8 billion and are expected to reach $5.4 billion by 2025. Net income over the same period is blossoming even more. In 2021, net income stood at $385 million and is estimated to reach $1.04 billion. With numbers like that it, should come as no surprise that CSL has easily outpaced the S&P 500 the last three years, jumping more than 120%: That’s big outperformance coming from a lesser-known name. And the way I was able to find this high-quality mid-cap was by scanning my favorite TradeSmith indicator, [Jason Bodner’s Quantum Score](. Carlisle Cos. is well into the buy zone, with a 75.9 rating from the Quantum Edge system. Slicing up the fundamental and technical scores reveals a strong business alongside market leadership: Folks, there’s a lot of opportunities in the stock market. They just tend to be smaller mid-range companies flying under the radar. By subscribing to Jason Bodner’s [Quantum Edge Pro]( service, you’ll have unlimited access to score any stock you like... and that’s a great tool as we head into November. TradeSmith helps everyday investors find opportunities with unmatched analytical data. And that’s how you win. I’ll leave you with eight powerful words to keep in mind from now until April... Always remember to buy mid-caps in November. Regards, Lucas Downey Contributing Editor, TradeSmith Daily © 2024 TradeSmith, LLC. All Rights Reserved. 1125 N. Charles Street, Baltimore, MD 21201 To unsubscribe or change your email preferences, please [click here](. [Terms of use]( | [Privacy Policy](