Let’s Talk June Swoon

We all know about “sell in May and go away,” but another investing meme quickly growing in popularity is the “June swoon.” There is some merit to this idea, as historically June has been a weak month for equities, and last year’s Brexit sell-off is still fresh in investors’ minds. In fact, since 1950*, only August and September have had worse average monthly returns; while over the past 10 years only January has been down more on average, as the chart below shows.

Here’s the good news: Technicals tell a more upbeat story. Per Ryan Detrick, Senior Market Strategist, “June historically has been a weak month for equities, but the catch is some of the worst drops have taken place when the S&P 500 Index was beneath its 200-day moving average to start the month. When the S&P 500 has been in a bullish trend (above this long-term trendline), June has been higher 59% of the time versus 33% when starting below.”

Given June 2017 will start with the S&P 500 firmly above its 200-day moving average, this helps support the likelihood that any volatility could be a buying opportunity. Be sure to read this blog over the coming days, as we will continue to examine the month of June.


*Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.

Standard deviation is a historical measure of the variability of returns relative to the average annual return. A higher number indicates higher overall volatility.

The economic forecasts set forth in the presentation may not develop as predicted.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.

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This research material has been prepared by LPL Financial LLC.

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