..that said, July could be a brutal month
Below are the 12 precedent instances where 1H returns were
>13% (ex-recessions). And we show both:
- July returns
- 2H returns
July returns are actually mostly poor and July returns are
worse when 1H is strong:
- July gains +0.4% when 1H >13%
- July gains +1.3% all years
- July win-ratio 50% when 1H >13%
- July win-ratio 59% all years
So July has a lower probability of rising and a lower overall
return when 1H is >13%. This could be seen as a form of
market payback. So we would default to expecting July to be
somewhat choppy.
- the caveat is 2Q2021 EPS should be strong --> positive
- will Delta variant headline risk cause selling -->
negative
Will be interesting to see when some more significant cooling
off happens. The June seasonality didn't materialize, first time
the market wasn't mechanical this year. Maybe July, maybe not. I'm
ready either way.
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Fundstrat
Posted by arun on 30th of Jun 2021 at 04:04 pm
FUNDSTRAT
..that said, July could be a brutal month
Below are the 12 precedent instances where 1H returns were >13% (ex-recessions). And we show both:
- July returns
- 2H returns
July returns are actually mostly poor and July returns are worse when 1H is strong:
- July gains +0.4% when 1H >13%
- July gains +1.3% all years
- July win-ratio 50% when 1H >13%
- July win-ratio 59% all years
So July has a lower probability of rising and a lower overall return when 1H is >13%. This could be seen as a form of market payback. So we would default to expecting July to be somewhat choppy.
- the caveat is 2Q2021 EPS should be strong --> positive
- will Delta variant headline risk cause selling --> negative
Will be interesting to see
Posted by fundamentalvalues on 1st of Jul 2021 at 07:52 am
Will be interesting to see when some more significant cooling off happens. The June seasonality didn't materialize, first time the market wasn't mechanical this year. Maybe July, maybe not. I'm ready either way.