One AI Stalwart that History Says is a Screaming Buy Right Now BY LUCAS DOWNEY, CONTRIBUTING EDITOR, TRADESMITH DAILY We hope you haven’t let the September blues bounce you out of stocks… We’ve shown you before how September is the worst month for stock market returns. Since 1928, stocks fall -1.1%, on average. That may be true… but Red Septembers also offer you a chance to pick up outstanding assets at fire-sale prices. Because once September is over, October kicks off one of the most bullish seasons for stocks all year long. And this reality makes the case for the green end-of-year setup we discussed two weeks ago. Today, we’ll lean into this bullish seasonality by unpacking two monster bullish signals in an all-star semiconductor company: ASML Holding (ASML). As their company website boasts, ASML is “the world’s supplier to the semiconductor industry.” Without question, they are incredibly important to the semi space. And as the last two years have shown us, the AI trend lives and dies on the health of the semiconductor business. I’ve followed this powerhouse name for many years. Whenever ASML shares are under pressure, I take note. And no matter if you’re a near-term or long-term investor, you too will want to see the two powerful setups triggering right now… ASML’s Oversold September Move Let’s begin with our first bullish signal for ASML. This will appeal to medium and long-term investors… and those ready for evidence-rich eye-popping gains! Likely the most widely followed technical benchmark is the 50-day moving average (50DMA). It’s a simple measure of a stock’s average price over the past 50 days. This benchmark gives traders a snapshot picture of an asset’s near-term price behavior. An upward sloping 50DMA reveals an uptrend; a downward slope signals a downtrend. But sometimes, when asset prices swing far away from the moving average, it suggests a near-term overbought or oversold signal. That’s where we find ourselves with ASML. The stock currently trades around $800 per share, roughly 11.5% below the 50DMA value of $900. Not only that, it’s traded below its 50-day average since July: 
Now, behind the scenes at TradeSmith, we have algorithms that parse tons of data in all kinds of ways… searching for outlier events. ASML came on my radar as one of just a handful of Nasdaq 100 constituents that are 10% or more below their 50DMA. Seeing this, I went back to learn what this could mean for the stock going forward. If you’re a bear, turn away now! Back to 2009, ASML has fallen 11% or more below its 50-day moving average a total of 170 times. Here’s what happened next: - Six months later, the stock averaged a 31.7% gain.
- Twelve months later spelled a 50.7% lift.
- Be bold for 24 months, and the stock has averaged an incredible 108.5% gain.
The core truth shown here is simple: Great businesses under short-term pressures represent strong value. But here’s the even better news… Remember when I said October kicks off a bullish period for markets? One look at the seasonal trends in ASML points to lift-off being just weeks away… ASML’s Seasonal Lift-off As I like to say, focus too much on today and you’ll surely miss tomorrow. Pullbacks on great companies look ugly at first glance. But as we’ve shown, they’re an opportunity… And especially when there’s a seasonal tailwind approaching. Using TradeSmith’s Seasonality tool, we can see that over the past 15 years, ASML enters one of its steepest seasonal patterns beginning in October. From Oct. 1 – Dec. 27, the average bump for ASML shares was 13.7%, with gains 87% of the time. 
Diving below, you’ll see that just two years out of 15 were red… with one of them being the infamously rare 2018 December sell-off: 
This study is geared towards the near-term traders out there. Coupled with the 11% dip below the 50DMA, we have a powerful one-two punch for ASML shares. I’ve learned through years of investing that there are good trades, bad trades, winning trades, and losing trades. - As for the latter two, you can’t control the outcome of any trade. Good trades can be losers, and bad trades can be winners.
- But if you focus on good trades – that is, trades with evidence on your side, not trend-chasing moves or baseless speculation – odds are high that these will turn out to be winners.
TradeSmith is here to help you see the opportunities for winning trades hidden in plain sight, backing you up with the data you need to make the right moves. This week you have the opportunity to upgrade to TradeSmith’s highest level of membership, where you get every TradeSmith tool plus all of our paid advisory services. As a TradeSmith Platinum user, you’ll get a “roundup” email each Saturday with all of the latest upgrades, research and trades available from just that email. Plus, there are Platinum exclusives like our TradeSmith Analytics dashboard. TradeSmith CEO Keith Kaplan also just announced another new benefit for TradeSmith Platinum folks. Click here to watch his announcement and consider upgrading to Platinum. Either way, don’t let a little September volatility scare you out of stocks. Instead, do what the crowd isn’t doing… loading up on outstanding businesses on sale. That’s the winning ticket. Regards, Lucas Downey
Contributing Editor, TradeSmith Daily | 
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