Weekly Update: June 6: Will There Be A June Swoon?

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By Debra Taylor, CPA/PFS, JD, CDFA™

 

Dear Friends,
After a late-month rally, we can say goodbye to the month of May, which now opens the door to June. Here’s the bad news, June is historically a weak month and it is actually the worst month of the year during a midterm year, down 1.8% on average.

The good news though is over the past 10 years, June has been a solid month, up 1.4% on average to rank as the fourth best month. But the past 20 years it has been weak (only September has been worse). Still, after the big bounce in late May, we wouldn’t be surprised at all if this recent strength continued into a potential summer rally.
After the huge gains in Late May, the 7-week losing streak for the S&P 500 Index had one week of respite where the S&P gained, but as of Friday, June 3rd the S&P was back to a losing week. There had been only three prior 7-week losing streaks and twice (1970 and 1980) saw the S&P 500 up more than 33% a year later.
The S&P 500 lost 18.7% before the rally during the week of May 23rd, which could be a good thing. Looking at previous corrections between 10-20% showed gains of nearly 25% on average a year later and nearly 40% two years later.
Huge gains like the recent 6.6% gain for the S&P 500 the week of May 23rd are usually a great sign for the bulls. Here are all the times it has gained more than 6% in a week (since 1950) and the future returns are very strong. Up 12.5% on average six months later and nearly 22% a year later on average is something that could have most bulls smiling after the rough start to 2022.
2022 has been a rough year for most, but we do see better times ahead. The recent bottom and rally could be the start of brighter skies ahead.
Please reach out with any questions.
Debbie
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