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Trading Opportunity

Aetna's stock exhibits excellent investment opportunities in May

This time we have picked Aetna Inc. Not as well-known as last month’s Adidas but a very large corporation nevertheless, listed on the S&P 500. It is a service company, selling health care plans to consumers, especially employees. Its products include medical, pharmaceutical, dental, behavioral health, long-term care, and disability plans.

Below is a chart showing the typical pattern the stock exhibits in the course of a calendar year.  These patterns can be discerned at a glance on a seasonal chart, which is calculated by averaging the performance of the stock over the past 15 years. The horizontal axis depicts the time of the year, the vertical axis the level of the seasonal pattern (indexed to 100).

As the chart shows, the stock has historically performed very strongly. The stock price in 2017 is more than ten times higher than in 2004. However, there is still an opportunity to pick out a time of the year that has shown stronger growth than the year-round average. The time period associated with the strongest seasonal performance is highlighted on the chart in blue. It begins on May 4th and ends on June 4th.  

How frequent were rallies in Aetna’s performance during the seasonally strong period? After all, it is theoretically possible that an outstanding gain achieved in just one or two years was responsible for generating this strong average performance.

Aetna rose in 13 out of 15 cases

The bar chart below depicts the percentage returns generated by Aetna’s shares over the relevant time period from May 4 to June 4 in every year since 2003. Red bars indicate years in which negative returns were posted, green bars indicate years with positive returns.