Could history repeat itself this year with June being regarded as the worst time for stocks over the past decade?
According to Jonathan Krinsky, MKM Partners market technician, if history is to repeat itself, the market is bound for a very sharp turn in July.
The fact that the stock market has been trading in narrow ranges since the beginning of 2015, is a clear indication that the market is about to break out in any direction. That is, while the bears could be taking first place in the short term, the bulls could see victory especially with the expectation of this breakout expected next month.
Krinsky also pointed out that a big sell off is imminent considering the weakness evident in the financial sector as well as the fact that S&P 500 index (SPX, -0.63%) has averagely declined by 1.32% over the last 10 months in the month of June.
Also, over the past decade, the SPDR Financial Select Sector exchange-traded fund (XLF, -0.89%) has averagely declined by more than 3 percent which also marks the worst monthly performer of key sector-tracking ETFs.
The next in line in terms of bad performance is that of SPDR Consumer Discretionary ETF (XLY, -0.69%) which averagely declined by 2.5% followed closely with a 2% decline exhibited by SPDR Materials ETFs (XLB, -0.65%) as well as SPDR Industrial (XLI, -0.99%).
On the upside, SPDR Utilities (XLU, -0.16%) and SPDR Energy (XLE, -0.11%) are the only two sector trackers that have gained ground by less than 0.5% each on average.
Krinsky further said that the historical drop in June is likely to present a perfect buying opportunity in July. He cited the fact that the S&P 500 index’s 1.68% average rise in the past 10 Julys. Also, he cautioned investors not to sell stocks based on a seasonal decline witnessed in June.