Going to dig deeper but posting this chart I just whipped up now
When SPX June returns are negative there is a 58% probability that July closes positive.
We can see that the monthly returns for 2013 are in a downtrend.
Year to date SPX is up over 12% for 2013.
Below are years when SPX closed June negative but over 10% for the year up to June.
Notice that we are still on track for a strong close to 2013 (very likely double from here).
Also take note of the strong positive July's given June and year to date returns.
The market seems to be in a volatile battleground between the QE taper and QE no-taper parties. Expect more uncertainty and volatility as the market tries to price in both arguments as US data econ hits the tape.
My guess is that we succumb to weak seasonality and the markets pricing in taper but no actual taper setting up a strong finish into the end of year.
Since the Fed has engaged in QE here are the average returns for SPX for the week leading up to NFP and 2 days following.
Data taken from 12/08-06/13.
So SPX dropped over 1% into the end of the month yesterday after running up almost a full 5% at the highs.
To put it in context SPX still managed to pull out a 2% May Returns and is still above 14% for 2013.
Below are charts for real June Returns and the Distribution of June Returns since 1950.
But the key question is: What can we expect SPX to do from here?
Here are the results when SPX closes out May up 2% and over 10% for the year up to the end of May:
*Average for June with the above parameters is .07%
*SPX data goes back to 1950 to 05/31/13.
Will be interesting to see where we close tomorrow. Overbought strong (4%+)?
Almost a given it closes much higher in the next 6 months.
Currently at 10 consecutive days with RSI over 70.
Why even a 15-16 point pullback during a strong overbought trend is still a low probability day trade.
Data gets really thin after 13 days.
With Bill Gross declaring the bull market in bonds is over how will equities and bonds perform in a post QE era?
Will equities and bonds fall together without the Bernanke put and underlying bid?