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Q3 2024 Analysis & Insights*

Updated on 7/1/2024

The “Q3 Analysis and Insights” below presents examples of the type of valuable and actionable insights generated from the Volworks Platform. The facts and commentary are illustrative, not intended to be exhaustive.

 

Investors and clients benefit from Volworks by using the platform directly via our web-based SaaS offering or, if preferred, by working collaboratively with the Volworks team of experienced professionals and letting Volworks drive the platform in order to import and creating portfolios, generate customized reports, recommend strategies and trades based on clients’ risk profiles, and, if desired, assist in executing and managing trades.

 

While many other top research firms provide historical data with at least some commentary, Volworks is next level and takes data and commentary farther.  As one example, we use our robust yet intuitive platform to analyze and present seasonal patterns and relationships often hidden deep in the forest of data, organizing and presenting the data in visually appealing and clear reports, tables, charts, and graphs. The result? Deeper and better knowledge and insights that lead to more informed data-driven decisions.

 

We then use these insights to present and model recommended options strategies and trades with all relevant performance, risk, and probability metrics that match investors' views and risk tolerances. For those investors who don’t use options, Volworks equity and ETF analytics add value by helping them effectively modify equity and/or sector allocations.

Q3 Analysis

(abbreviated version for non-clients)

While Q3 has been the worst-performing quarter over the past 10+ years, a deeper dive into the data tells a more nuanced story. For example, July is the second-best month of the year, while September is the worst month. So, based on this additional nuance, Volworks doesn’t just look at adjusting for Q3 with options strategies or equity rotations.

 

As an example, as 100% percent of the sectors and 91% of the S&P 500 top 100 stocks by market cap are positive in July, for September 0% of the sectors and only 3% (3 stocks, COP, REGN, UBER) of the same stocks have positive returns. Concerned investors who may want to hedge some of their equity exposure might opt to wait until late July or early August. For other investors who aren’t that concerned about downside risk but want to take advantage of the seasonality of their stocks during Q3, writing covered calls in August or September or overlaying positions with Booster trades (1x2 call spreads) makes sense.

Q3 Highlights

“just the facts, ma’am”

Returns based on 5 year recency adjusted weighted average

  • Q3 is the worst performing quarter for the S&P 500 with the SPY return of (1.3%). This compares to Q1 3.7%, Q2 2.6%, Q4 9.9%

1st Bullet - Q3 Highlights.png

  • The equal-weighted S&P 500 (RSP) average return was (2.4%) vs (1.3%) for the cap-weighted S&P 500

3rd Bullet - Q3 Highlights.png

  • 9 out of the 11 sectors have negative returns with consumer discretionary (XLY) up 1.4% and energy (XLE) up 0.1%

2nd Bullet - Q3 Highlights .png
Sector SPDR ETFs + SPY, QQQ, RSP _ _mark_Q3__mark__ Quarterly Returns (Weighted 5Yrs) (2)

  • SPY mean return (non-recency adjusted) was 0.3% vs (1.3%) recency adjusted. While 2019-2021 had positive Q3 returns, 2022’s return was (5.3%), and 2023’s return was (3.6%).

3rd Bullet - Q3 Highlights .png

  • 10 out of the 11 sectors, including the SPY and QQQ, have a non-weighted mean that is greater than their recency-adjusted weighted mean with energy (XLE) being the exception

4th Bullet - Q3 Highlights .png

  • In 2022 & 2023, the vast majority of sector returns were negative

5th Bullet - Q3 Highlights .png

  • However, even though Q3 has been the worst-performing quarter for sectors over the past 10+ years, July was the second best-performing month 4.9% return while September is the worst month (5.7%)

Individual Sector Highlights

  • XLY (Consumer Discretionary) – Has been the best-performing sector with the only negative year in 2023 (5.2%)

Quarterly Returns by Year.png

  • XLY (Consumer Discretionary) & XLE (Energy) were the only 2 sectors with positive weighted avg returns

  • XLE (Energy) – Only sector with positive Q3 returns in 2022 and 2023. It was also the only sector since 2020 that had a return >5% in any year (returned 11.4% in 2023)

  • XLF (Financial) - Was the only sector that beat the SPY 4 out of the past 5 years

2nd Bullet.png
3rd Bullet.png
4th Bullet.png

S&P 500 Stocks

  • 36% of S&P 500 stocks had a positive recency weighted 5 year average return

  • Only 3 stocks >$75B market cap DHR, INTU, SNPS were positive 2019-2023

3 stocks 100 percent intu, dhr, snps.jpg

  • Only 4 stocks >$75B market cap COST, HD, INTU, SNPS beat the S&P 500 2019-2023

  • Only 11% (55 stocks) of the S&P 500 were positive in 2022 & 2023. Compared to Q4 where 69% (344 stocks) were positive in 2022 & 2023. Interesting fact: No Mag 7 stocks

  •  Only 12% (15 stocks) of S&P 500 stocks >$75 billion market-cap (124 stocks) were positive in 2022 & 2023. Compared to Q4, where 73% (90 stocks) >$75B market cap were positive in 2022 & 2023.

  • Only 7 S&P 500 stocks were positive every year since 2014 in the second half of the year

  • 91% of the top S&P 500 stocks by market cap were positive in July which is much higher than in August and September

Magnificent 7 Stocks

  • Most of the Mag 7 stocks had poor 2022 & 2023 Q3s

Mag 7 Q3.png

S&P 500 Stocks <$100 Billion in Market Cap

  • Top 10 performing 5 year weighted average adjusted for recency include:

    • FSLR, BBWI, EPAM, CF, MPC, BLDR, SMCI, JBL, ON, ENPH

Q3 Stock less than $100B best performing stocks.jpg

Return Calculations Methodology*

Volworks “Contextual Expiration Returns™” and other period returns (monthly, quarterly, 1st half and 2nd half of year, annual returns, etc.) utilize a recency-biased weighting scheme by default for multi-year returns. We feel overweighting more recent returns makes sense. However, for investors who don’t want to adjust for recency for past returns, our platform also calculates the mean and median returns, along with standard deviation, for all our stocks and ETFs with no weighting adjustments. This is a platform setting that can be changed instantly by each user. By default, Volworks returns and proprietary analytics are based on the past 5 years of data. (Note: the Volworks Platform contains data from as far back as 1960, but for a host of reasons, our primary and default focus is on the past 5 years.)

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