Futures are down 5, but that means very little. What should we expect during the months of July and August? Instead of making predictions, which change all the time with facts on the ground, let’s review the history of the summer months, documenting what names and sectors do best, traditionally.
For this task, I will be using the seasonality engine inside of The PPT.
First, I’d like to point out that one of my newly minted positions, OWW, is a July seasonality play.
Here are the stats for OWW, during the month of July–over the past 5 years.
2008: +17.7%
2009: +36.84%
2010: 18.37%
2011: 30.92%
2012: 18.9%
Avg return is 24.4%
Other notable outperformers include:
CZZ
WPRT
CFX
ARR
ARMH
DPZ
ACC
SPWR
BIDU
POT
MELI
It’s worth noting, there aren’t many tech outperformers in July. It’s a hodge podge of REITs, property management stocks and oil drillers.
The best performing ETFs are ERX, FXI, URE and SLV. That just about sums up July.
During August, the best performing ETFs are AGQ, FXP and TLT.
Everyone likes to make a big deal about how bad June is for the market. But July and August aren’t much better. The S&P has gone higher just 45% of the time in July for an avg return of +0.33%. In August, the SPY traded up 65% of the time, but yielded a negative return of 0.29% over the past 20 years.
Truth be told, August would’ve yielded a positive return had it not been for the Asian contagion plunge of -14% back in 1998.
In summary, I expect this summer to be a stock pickers market, with emphasis focused on the bond market the whole way. Things might die down a bit for the next two month, but may become very active in the latter half of August and most certainly during September.