5 Stocks to Keep an Eye on in September

Historically, September has been the worst month for U.S. stocks since 1928. According to CME Group data, the S&P 500 has fallen 55% of the time in September.

And over the past 4 years, the index has closed September in the red zone. As you can see, market trends have maintained their pattern this year, with the Nasdaq down more than 4% and the S&P 500 down 2.7%.

Trading volumes have played a huge role in this. Traders and investors are returning from their “summer vacations” – trading activity is up, stimulating significant price swings.

The first month of fall should be one of the most market-volatile this year. It is during this period that many economic and political factors converge. Therefore, there are good opportunities for traders to trade actively and for investors to rebalance and diversify their portfolios.

Economic and political factors

In September, the economic calendar is full of important dates.

All market participants will focus on the fresh US consumer inflation data and the Fed meeting.

CPI is expected to slow down to 2.6%, encouraging the Fed to cut the rate more aggressively.

The Fed meeting will be held on September 18. Traders are no longer expecting “when” they will cut rates, but rather “how much”. A 0.5% cut at once is widely discussed, but Bank of America noted that the most likely scenario is a 0.25% rate cut at each meeting starting in September. And from March 2025, the regulator will slow down the rate of reduction to 0.25% per quarter.

We should not forget about the U.S. presidential election, which will be held in early November. Election years are usually favorable for the market. But in the short term, the volatility index will noticeably increase.

September 2024 Top 5 Stocks to Trade In

Do you want to know about growth stocks? We have analyzed and made a financial forecast of the markets for September 2024. So, here are five stocks for portfolio diversification.

Alphabet (GOOG)

As the market expects a Fed rate cut in September, we recommend paying attention to the entire technology sector. But especially Alphabet.

The company released its Q2 report on the evening of July 23. From it follows:

Alphabet’s revenue rose 14% year-over-year to $84.74 billion.
Advertising revenue was $64.62 billion, up from $58.14 billion last year, showing that Google’s advertising business continues to grow.
EPS was $1.89, 2.31% above analysts’ expectations.

GOOG is actively developing its own AI, Gemini AI. Apple’s recent presentation was rife with claims of integrating AI into smartphones, but Google is much earlier in the process of implementing these technologies into our devices. The Gemini AI model implementation is expected to be on 200 million Android devices by the end of 2024.

Technical Analysis

The stock has been falling for 3 months in a row and has now hit an important support level of around $150. The monthly chart clearly shows this.

GOOG monthly chart

A descending wedge is already clearly visible on the daily chart. This pattern usually signals a market trend reversal. It is also worth paying attention to the 14-day RSI – the indicator is close to the oversold zone.

Downward wedge and RSI on GOOG daily chart

Trading strategies

For day trading, it is worth trying to realize a bounce from $150 with a target of about $154.87. The stock’s ATR is 4.29 points, so a day trader should expect intraday movement in this range. If it drops below $140 – the investment strategy is off.

For swing traders, until mid-September, the optimal entry point for a long position will be the $145 – $150 zone. The stop in this case will be below $140.

Exit from the position should be made in the zone $170 – $175. The profit potential is 25 – 30 points, with a risk of only 5.

Netflix (NFLX)

The stock has made a stunning comeback over the past 2 years. After falling over 75% in 2022, the company has been able to regain market confidence thanks to some great business decisions. The share price has rewritten ATH since then.

One of the company’s most successful solutions was a subscription with advertising. This subscription option was introduced in June 2022, lowering the subscription price and also significantly increasing the service’s audience.

The company reported that in the second quarter, the number of ad-supported users grew by 34% year-on-year.

The global number of paid users of the streaming service grew 16.5% year-over-year to 278 million.

The company’s Q2 revenue totaled $9.55 billion, which was in line with analysts’ expectations.

NFLX Technical and Financial Analysis

The stock has been in a “healthy” uptrend for a long time. The nearest support levels are the 50 and 100 MAs. Price levels are also located on these economic indicators. Therefore, it is worth paying special attention to local bounces or accelerations downward from them.

Daily chart of NFLX with 50 MA (blue) and 100 MA (red)

Trading Strategies

For day trading, NFLX is perfect. The ATR of the stock is more than 17 points. The $660 level deserves special attention. At this point, the price can both accelerate down to $642.60 and bounce up. In these cases, it is worthwhile to observe the price movement and open a position depending on the local trend.

For swing traders, it is worth waiting for the breakdown of the $700 level. The target in this case will be the zone of $775 – $800. Stop Loss order should be below $670. If the share price quickly rises to the target or slightly below it, it will be necessary to fix 80% of the position. Profit potential is 75 – 100 points, risk is 30.

Adobe (ADBE)

Adobe is one of the most stable companies in terms of reports. The company has only had one failed quarter in the last 10 years.

The Q2 report will be released on September 12, after the market closes. This suggests some risks for medium-term traders. As price gaps could liquidate positions.

Since the report has not been presented yet, we will base it on analysts’ expectations and further reactions of traders.

According to Wall Street analysts forecasts:

Wall Street analysts forecast that Adobe will report quarterly earnings of $4.53 per share in its upcoming release, pointing to a year-over-year increase of 10.8%.

It is anticipated that revenues will amount to $5.37 billion, exhibiting an increase of 9.7% compared to the year-ago quarter.

Technical analysis

The local resistance zone for the stock is $580 – $582. The key movement should be expected along the marked trend line. The upcoming report will play a huge role in this.

Weekly chart of ADBE with resistance level and trend line

Trading strategy

For day trading, the asset, like NFLX, is perfectly suited. The stock’s ATR is more than 12.80 points. So, short-term bursts of volatility will provide an opportunity to make money both ways. The key level – $580 – is keeping the price from breaking out for now. If the price accelerates upward, the target zone will be $618 – $620.

It is not recommended to open a position before the report is published, as there is a serious risk of liquidation.

For swing traders, it is worth waiting for a breakout of the $620 level with further movement towards ATH and higher.

McDonald’s (MCD)

Let’s not dwell only on technology stocks. Let’s pay attention to safer sectors as well. Unlike stocks like GOOG, AMZN, AAPL, META, and others, MCD has held up much stronger over the past month, and against all odds the market is rising.

As for the Q2 report, well:

McDonald’s fell short of earnings and revenue expectations for the second quarter. The company’s same-store sales fell for the first time since the fourth quarter of 2020.
Earnings per share were $2.97 adjusted versus $3.07 expected.
Revenue was $6.49 billion versus $6.61 billion expected.

The company’s results have sagged for 2 consecutive quarters. However, Jefferies analysts believe that Wall Street is underestimating McDonald’s Q3 potential, believing that current projections for US same-store sales are too conservative.