Famous February Seasonality for Hersheys HSY over 20 Years

Jan 17, 2014: 4:04 PM CST

Hershey’s (HSY) has a well-known seasonal pattern for share prices, notably rising for the month of February.

Let’s take a look at this famous historical ‘seasonal tendency’ as part of a broader discussion of seasonal stock patterns.

First, we’ll use StockCharts.com data to show the monthly performance of HSY shares in a graph:

HSY Seasonality Hersheys Hershey's stock Trading Tactics Seasonal Patterns Seasonal Analysis Seasonality in Trading Stocks

The chart above takes the price data over 20 years and arranges it by monthly performance.

The chart reveals two variables:

The percentage of months where shares rose (revealed at the top of the bar)

The average percentage increase (shown at the bottom of the bar)

One month leaps off the chart at us – February.  Over the last 20 years, the data reveal that Hershey’s (HSY) shares were higher 86% of the time for February.

Of those months, the average (20 year) monthly gain was roughly 4.6%.

On the other hand, October was the worst performing month for HSY shares, where 37% of Octobers showed monthly gains (and the loss was roughly 0.6%).

There’s another way to view the same data, and that’s by comparing monthly performance to the broader S&P 500.

We can see this similar comparison in the chart below:

HSY Seasonality Hersheys Hershey's stock Trading Tactics Seasonal Patterns Seasonal Analysis Seasonality in Trading Stocks

Instead of showing actual price performance, we see how many months Hershey’s shares outperformed the S&P 500.  We also see the average monthly over or under performance percentage.

For example, Hershey’s shares (HSY) outperformed the S&P 500 84% of the time in February, yet outperformed 26% of the time in November.

The average over-performance for February was 5.7% (greater than the S&P 500 return for the month) and underperformed the S&P 500 by 1.1% in November according to the data.

I like to look beyond the data itself, and we can see the actual price performance with February’s performance isolated on the two pure price charts below:

HSY Seasonality Hersheys Hershey's stock Trading Tactics Seasonal Patterns Stock Chart Seasonal Analysis Seasonality in Trading Stocks

HSY Seasonality Hersheys Hershey's stock Trading Tactics Seasonal Patterns Stock Chart Seasonal Analysis Seasonality in Trading Stocks

It’s one thing to run a stock through a seasonal comparison, but another to take a moment to ponder whether the data reveal a random fluctuation or if there’s a real underlying cause for the performance.

The logic is simple and well-known for Hershey’s – Valentine’s Day.  Hershey’s is a leading chocolate/candy producer and people tend to purchase these sweet treats near Valentine’s Day.

Each company may have a similar – though lesser known – reason for over-performance for a particular month of the year.

As we turn the corner into February 2014, keep in mind that there’s absolutely no guarantee February 2014 will be an up-month for Hershey’s, but there indeed exists a seasonal tendency for shares to rise and outperform the market in February.

Seasonal patterns can be catalysts for trading decisions, especially when accompanied by additional fundamental or technical (chart) analysis reasons to add shares to a portfolio or put on a short-term swing trade.

Speaking of February, join me and many other traders for the rapidly approaching New  York International Traders Expo which will take place February 16 – 18.

I’ll be presenting two classes at the Expo (“Detailing Day Structure for the Intraday and Swing Trader” along with “Forecasting Price Movement with Market Internals and Momentum“) and look forward to seeing you there!

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Corey Rosenbloom, CMT
Afraid to Trade.com

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1 Comment

One Response to “Famous February Seasonality for Hersheys HSY over 20 Years”

  1. blake Says:

    Coincidence is one thing but for the averages to be that far apart is something. Kind of makes you want to buy HSY every October and dump it in February.

    Blake
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