Historically, June is the one of the weakest months for the S&P with only an average return of 0.3%. June marks the entry into the “summer doldrums” which consists of the weakest rally among all four seasons.
June is also a Triple Witching month. Four times a year stock options, index options and index futures all expire at the same time. The performance of the overall market immediately following June’s Triple Witching has been absolutely horrible in years past. The week after has seen the Dow down 15 out of the last 17 years. Watch to see if the market is overbought going into the week following Triple Witching. If so, this could have the potential for a decent short-term fade to the downside.
Seasonality alone is (in almost every case) not a reason place a trade. However, when compared with the current state of the market at the time the seasonal tendency arrives, the probability of a successful trade can be increased tremendously. Always be aware of the market’s seasonal picture.
S&P 500 (June)
- Average return during month – 0.2%
- Percentage of time positive – 52%
- Max Gain – 8.2%
- Max Loss – (-8.2%)
- Average return during month – 1.2%
- Percentage of time positive – 63%
- Max Gain – 16.6%
- Max Loss – (-9.4%)