Why Stocks Higher in May and June Is a Good Thing

by Ryan Detrick, Investment Strategist, LPL Research

May and June historically have tripped up stocks, which makes 2018 all the more interesting as both of those sometimes troublesome months were in the green. As LPL Research Senior Market Strategist Ryan Detrick explained, “When months that have been usually weak weren’t, that is a sign. In fact, when the S&P 500 Index has been up in both May and June, the rest of the year has been higher the past 11 times! Not to mention the full-year return has been lower only once (out of 22 times) going all the way back to 1950*.”

As our LPL Chart of the Day shows, returns the rest of the year and for the full year have been quite impressive when May and June closed higher.

A Sign of Better Times Ahead?

Source: LPL Research, FactSet 06/29/18

Last, although we would never invest based on this, the first trading day of July has been the second-most likely day of the year to be green. In fact, this day has closed higher 72.1% of the time since 1950, with only the 21^st trading session of July more likely to be green.

The First Trading Day of July Likes Green

Source: LPL Research, FactSet 06/29/18

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*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.

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