Sell These Stocks in May and Go Away

HOG and F stocks are among the worst to own this month, historically

May 1, 2018 at 1:18 PM
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While healthcare stocks tend to be the best to own in the month of May, historically, motorcycle titan Harley-Davidson Inc (NYSE:HOG) and automaker Ford Motor Company (NYSE:F) tend to struggle. In fact, HOG sports the worst win rate for May of all S&P 500 stocks, with F stock not far behind. 

Below are the 25 worst stocks to own in May, looking back 10 years, according to Schaeffer's Senior Quantitative Analyst Rocky White. If past is prologue, traders may want to "sell in May and go away," at least as far as these stocks are concerned.

worst may stocks

Lower Lows Could Be Ahead for Harley Stock

Harley-Davidson stock has ended the month of May in the red 90% of the time over the past decade. The equity has suffered a loss of 5.2%, on average, putting it at the top of our list of Worst Stocks for May.

Since touching a six-month peak of $56.50 in late January, it's been downhill for HOG shares. The security has dropped 28% in that time frame, with rebound attempts stalling in the face of its descending 30-day moving average. The stock was last seen 1.5% lower to trade at $40.51, and just off a new two-year low of $40.14.

HOG stock chart

Despite the stock's struggles in 2018, HOG has no shortage of call buyers. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 1.01 is in the 71st percentile of its annual range. This points to accelerated Harley-Davidson call buying relative to put buying of late.

Of course, some of those call buyers -- particularly those scooping up out-of-the-money options -- could be short sellers seeking an options hedge. Short interest represents more than 13% of HOG's total available float.

Whatever the motive, short-term Harley options can be had at a relative discount. The equity's Schaeffer's Volatility Index (SVI) of 26% is higher than just 11% of all other readings from the past year, indicating near-term HOG options are pricing in relatively muted volatility expectations at the moment.

Ford Stock Flirts With Key Trendline

Ford Motor stock has ended the month of May higher just 20% of the time over the past 10 years. The automaker has averaged a monthly loss of 3.28%, to be specific.

Today, F stock is down 0.4% to trade at $11.21, after U.S. auto sales slumped in April. As with HOG, Ford shares also suffered in a big way in early 2018, and despite the company's well-received earnings last week, the equity is still stuttering below its 200-day moving average. Further, the overhead $11.75-$11.80 level previously acted as support for F stock, and now represents a 50% Fibonacci retracement of the security's drop from January highs to March lows.

ford stock chart

Still, Ford options traders have been more bullish than usual. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.79 is in the 78th percentile of its annual range. And this time there's not an abundance of short interest that could point to hedging.

Likewise, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.59 is in just the 20th percentile of its annual range, indicating near-term call open interest is more prevalent than usual, relative to put open interest. Peak open interest in the front-month May series stands at the May 12 call, and could act as an options-related speed bump for Ford shares in the near term.


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