2 Sectors to Watch Before Halloween

Plus, 25 of the best SPX stocks to target this month

Subscribers to Chart of the Week received this commentary on Sunday, October 1.

October is finally here, mercifully closing the book on a brutal month for investors. In the spirit of fresh starts, we’re putting September in the rear view mirror and unpacking a fresh list of historical October outperformers from Senior Quantitative Analyst Rocky White. October’s list features an unsuspecting sector filling seven of the top 25 S&P 500 Index (SPX) best-performing stocks over the past 10 years. We will also be taking a look at the runner-up entering a pivotal period of the year.

Marking the top spot on White’s chart, and also the most popular sector is electricity stock Dominion Energy Inc (NYSE:D), which boasts a perfect record for the month of October in the last 10 years. The stock has churned out an average one-month return of 2.4% for October. As for the remainder of the utility sector, October looks promising. The names slated for wins, if history is any indicator, include American Electric Power Inc (NASDAQ:AEP), NextEra Energy Inc (NYSE:NEE), Entergy Corp (NYSE:ETR), FirstEnergy Corp (NYSE:FE), and more. Often unheard of on White’s “Best 25,” all remaining electricity names enjoyed an average return that moved positive in nine out of the last 10 Octobers.

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The second-most popular sector on White’s list is banking. Blue-chip finance giant Goldman Sachs Group Inc (NYSE:GS) stands out, with an average October return of 5% in the last 10 years – ending the month positive nine out of 10 times. A similar October outperformance would help GS reclaim its year-to-date breakeven level. There’s technical support in place as well at $320, which held the latest three pullbacks over the summer.

The finance sector also features fall outperformers Truist Financial Corp (NYSE:TFC), Wells Fargo & Co (NYSE:WFC), US Bancorp (NYSE:USB), and PNC Financial Services Group (NYSE:PNC). Many of these names will also report earnings in October, adding an ounce of intrigue (and volatility) into the equation. With 90% win rates across the board, one thing is abundantly clear: October trading has the potential to remove the bitter taste September has left in investors’ mouths.

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