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Tiz the season to be bullish...

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No this isn't a reprint of last year's late August and early September intraday updates, but there are some stocks that tend to start benefiting from a seasonal up-tick in business when the holiday season is just ahead.

Seasonality is something that can easily be tested on a historic basis. While the "results" can vary, good seasonal stock/sector plays from the bullish side tend to show some type of bullishness regardless of broader market fluctuations. A bull who's long a seasonal bullish play tend to do "better than average" when a broader market moves higher, while bullish results can still be had should the broader market move lower.

One of my "favorite" seasonal plays over the years has been a bullish trade in Campbell Soup (NYSE:CPB) $23.40 +1.29% into the latter part of November and early December. Yes, it has been a hot summer and I doubt that a hot bowl of soup has been the dinner or lunch of choice this summer. But when the snow flakes start to fall and the blustery winds of summer are upon us, there's nothing that warms the innards like a hot bowl of soup.

Campbell Soup - Month Chart intervals

Earlier this week I began thinking about season plays and "top of mind" for this time of year has been Campbell Soup (CPB). Yesterday I received an e-mail from a subscriber that was with us last year that remembered bullish success in this stock at the same time of year. I chuckled to myself that its funny how traders and investors look to repeat success and perhaps that's why CPB has been a decent bullish trade dating back to 1993. Ideally, I'd like to get a pullback entry in the stock at $22, but when looking at the monthly chart, CBP tends to follow through with bullishness in September, when the monthly chart has August closing near the months high.

Another group of stocks that tends to trade bullish into the fall is the airlines. The Airline Index (XAL.X) 46.67 -0.34% was a rather remarkable bullish performer last fall after the shock of the September 11th terrorist attacks.

As mentioned a couple of days ago, one option trade I put on in my account and still hold is a bullish call play in Frontier Airlines (NASDAQ:FRNT) $7.85 -1.87% in the November $10 calls (FUOKB) $0.55, with a stock price target of $13 prior to expiration as an exit point.

Jeff Bailey
Senior Market Technician
Option Investor


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