It always tickles me to hear folks on the radio quote daily market numbers... You'll hear something like, "The Dow Jones Industrial Average closed up 37 points yesterday." Or maybe they'll say, "The S&P 500 Index is down 123 points today."
It's OK if the End of June Falls Flat
By Marc Chaikin, founder, Chaikin Analytics
It always tickles me to hear folks on the radio quote daily market numbers...
You'll hear something like, "The Dow Jones Industrial Average closed up 37 points yesterday." Or maybe they'll say, "The S&P 500 Index is down 123 points today."
I have to wonder...
What do everyday people do with this information? Do they know what it means relative to the specific index?
I don't think many radio listeners hear "123 points," check the current level of the S&P 500, and figure out what it means in percentage terms. But that type of context matters.
Perhaps even crazier, that's the bare minimum amount of context needed. Most folks also don't know what these daily market numbers mean on a broader basis...
Does a "down" day mean anything? What about several of them in a row?
I've come to realize my years as a "quant" have spoiled me. I've had access to a mountain of data for so long that I'm now awash in market context.
For me, a couple points up or down do mean something. That's true even if they don't matter to most folks.
I'll show you what I mean today...
We'll talk about what a few more "down" days could mean for the market. And more importantly, we'll cover what history tells us to expect if the rest of this month falls flat...
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Since 1995, the market has experienced a sell-off at the end of June after a positive May on 22 occasions. That's out of a possible 28 years over that span.
In other words, about 80% of the time, the market experiences what a lot of observers call a "June swoon." And in those 22 instances, the average sell-off from June 19 through June 27 is roughly 1%.
So if you hear about the market selling off over the next few days, just know that...
It's normal.
The real question is, "What happens next?"
Here's when being awash in a mountain of market data comes in handy...
You probably haven't heard of Wayne Whaley before. But he's one of the countless quants and financial thinkers who I follow.
Whaley won the 2010 Charles H. Dow Award. That's a recognition of excellence in the field of technical analysis.
To the point of today's essay, Whaley recently crunched the numbers on the stock market's stretch of so-called June swoons since 1995. What he found is worth paying attention to...
You see, after a June swoon, things start looking up.
Of the previous 22 times, the S&P 500 produced gains from June 27 to July 23 in 19 instances. That's an 86% success rate.
The S&P 500 averaged a gain of more than 2.2% in those instances, too.
Remember, we're talking about a broad market index. A 2%-plus move higher after a losing stretch is a big positive change.
Our takeaway is simple...
On their own, it's hard to interpret the market's day-to-day movements. Most regular folks simply don't have the proper context to know what everything means.
But with a little historical data, we can see these numbers in their larger context...
For example, it's incredibly common for the end of June to produce a market sell-off. And that could happen in the coming days.
That's OK.
History tells us that a June swoon often leads to positive returns over the following month. So don't let it scare you out of the markets right now.
Good investing,
Marc Chaikin
P.S. It's no secret we're in the early stages of a new bull market, just as I predicted would happen back in November. And it's no secret Wall Street is pouring money into stocks.
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This recent surge in the market has opened a "backdoor" that could make you 300% on some of the least-known stocks this summer.
Before you buy any stocks, though, I urge you to see how this "backdoor" works – and what I recommend today. Don't delay, though. This presentation will go offline tomorrow.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.71%
11
16
3
S&P 500
-0.52%
169
243
87
Nasdaq
-0.14%
59
33
8
Small Caps
-0.45%
546
898
425
Bonds
+0.69%
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Discretionary
+0.98%
Information Technology
+0.57%
Communication
+0.26%
Staples
+0.26%
Health Care
-0.05%
Industrials
-0.08%
Utilities
-0.42%
Financial
-0.48%
Materials
-1.17%
Real Estate
-1.18%
Energy
-3.18%
* * * *
Industry Focus
Bank Services
8
31
55
Over the past 6 months, the Bank subsector (KBE) has underperformed the S&P 500 by -29.87%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
BKU
BankUnited, Inc.
PB
Prosperity Bancshare
GBCI
Glacier Bancorp, Inc
* * * *
Top Movers
Gainers
GNRC
+7.91%
TSLA
+5.34%
PYPL
+3.70%
NVDA
+2.61%
CRM
+2.46%
Losers
SEDG
-7.71%
ENPH
-5.40%
WBD
-4.77%
BWA
-4.55%
CE
-4.54%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
LPLA
No earnings reporting today.
Earnings Surprises
FDX FedEx Corporation
Q4
$3.41
Beat by $0.67
* * * *
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