Dow Stocks To Trade In March

For this month, the cycle/relative strength concept is applied. First, the Dow Jones 30 stocks are ranked from the best performer to the worst by calculating the expected return in that month. The top best traditional performers in the month were then screened for relative strength by a unique measure that sorts by several relevant time periods. Those that pass both screens are buys for the month. The stocks that are both weak monthly performers and weak relative performers are short sales for the month.

The markets are expected to rally to mid-month, so the longs are favored.

This process has been applied to the Dow Jones 30 stocks by buying the top 5 rated stocks and by shorting the 5 lowest rated stocks. From January of 2020, the top five long stocks have risen by an amount about 63% greater than that of the short sales and 19% over the DJIA. The short sales were net negative over that time period at -7%. The February long recommendations were up 5.2% versus 0.2% for the shorts and +2.2% for the DJIA.

Here are the top five long recommendations for this month:

Amazon AMZN -AMZN

American Express AXP -AXP

Home Depot-HD

Caterpillar CAT -CAT

JP Morgan-JPM

Here are the top five short recommendations for this month:

MMM-MMM

Boeing-BA

Amgen AMGN -AMGN

Dow-DOW

Johnson & Johnson-JNJ

Amazon is the new entrant in the index, replacing Walgreen-Boots. This stock has hit a new all-time high. Despite this achievement, monthly momentum is not excessively overbought. This projection is supported by the fact that relative strength broke its long-term downtrend in January of 2023, so this relative uptrend is young and is likely to continue through 2023.

Amazon Daily, Weekly, Monthly

MMM is likely to move lower. Note that both absolute and relative price have hit new lows. Monthly momentum shows lower highs. There is simply no support and no momentum indications of a low.

MMM Daily, Weekly, Monthly