What to expect from stocks in June, plus 🧁 weekend sprinkles 🧁
The Sandbox Daily (5.31.2024)
Welcome, Sandbox friends.
Say goodbye to spring and hello to summer !!!
Today’s Daily discusses:
what to expect from stocks in June
🧁 weekend sprinkles 🧁
Let’s dig in.
Markets in review
EQUITIES: Dow +1.51% | S&P 500 +0.80% | Russell 2000 +0.66% | Nasdaq 100 -0.01%
FIXED INCOME: Barclays Agg Bond +0.32% | High Yield +0.35% | 2yr UST 4.879% | 10yr UST 4.504%
COMMODITIES: Brent Crude -0.29% to $81.63/barrel. Gold -0.75% to $2,348.8/oz.
BITCOIN: -1.22% to $67,606
US DOLLAR INDEX: -0.08% to 104.633
CBOE EQUITY PUT/CALL RATIO: 0.87
VIX: -10.71% to 12.97
Quote of the day
“If you spend your time chasing butterflies, they'll fly away. But if you spend time making a beautiful garden, the butterflies will come.”
- Mário Quintana, Brazilian Writer
What to expect in June
So much for selling in May, as the S&P 500 just ripped higher by +4.8% – qualifying as one of the best May periods since 1950 – despite being a historically weaker month over market history.
The rebound back to toward record highs has also pared April’s -4.2% drop. Perhaps “April showers bring May flowers” was a more fitting analogy than “Sell in May and Go Away.”
So, as we turn the calendar forward to summer (!!!), what do seasonals foreshadow in June?
The S&P 500 index has generated an average price return of +0.1% for the month of June since 1950 and higher 55% of the time – hardly much to get excited about.
For context, the S&P 500 has posted average monthly returns of +0.7% and finished positive 61% of the time for all months since 1950.
But, since this is an election year, the index is up +1.3% on average – not too bad.
What’s more, summer rallies are quite common in the 4th year of election cycles. See below:
The setup heading into June offers a bit of caution, however.
Despite the S&P 500 rallying above its March highs and notching a 24th record high of year, market breadth has weakened as the advance was largely driven by a handful of mega cap stocks that rallied on stronger-than-expected earnings.
Participation in the May rally was relatively narrow as the month progressed, with fewer constituents making new 52-week highs and trading above their 20-, 50-, and 200-day moving averages (DMA) than back in March.
Furthermore, the lack of overbought conditions amid the rally created a negative divergence between momentum and price action. For example, the S&P 500’s Relative Strength Index (RSI) – a momentum oscillator used to measure the velocity of price action to determine trend strength – failed to reach overbought territory or levels commensurate with prior highs registered earlier this year.
Important to note, however, narrow participation in breakouts above key resistance has been characteristic of this bull market (generals lead, soldiers follow).
With bulls reclaiming a key level today (north of the March highs), investors will be looking for follow through next week as well as market breadth to broaden out in June as key pieces to underpin the next leg higher.
Source: Carson Group, Clearnomics, Brian Bond CMT
🧁 Weekend sprinkles 🧁
Here are the ideas, sights, and sounds that caught my attention this week – perfect for quiet time over the weekend. Enjoy!
Blogs
No Mercy / No Malice – Bubble.ai (Scott Galloway)
Young Money – No rules (Jack Raines)
The Irrelevant Investor – How lies spread (Michael Batnick)
Discipline Funds – This is why consumers are so negative (Cullen Roche)
CFA Institute – Stocks for the long run? Setting the record straight. (Edward McQuarrie)
Books
Charles Duhigg – Supercommunicators: How to Unlock the Secret Language of Connection (Amazon)
Podcasts
The Ringer Plain English feat. Derek Thompson and Jason Furman – U.S. Economy FAQ: skyrocketing insurance prices, stuck inflation, higher rates, and wrong Experts (Spotify, Apple Podcasts)
N.Y. Times The Daily feat. Sabrina Tavernise and David McCabe – The Government Takes on Ticketmaster (Spotify, Apple Podcasts)
Movies
The Dry – Eric Bana, Genevieve O'Reilly, Keir O’Donnell (IMDB)
The Grey – Liam Neeson, Dermot Mulroney, Frank Grillo (IMDB)
Music
Shaboozey – A Bar Song (Tipsy) (Spotify, Apple Music)
Charlie Puth – Hero (Spotify, Apple Music)
daydreamers – Call Me Up (Spotify, Apple Music)
Ludacris – Growing Pains (Spotify, Apple Music)
Zach Bryan – Pink Skies (Spotify, Apple Music)
Pop Culture
Jerry Seinfeld and the Art of Mastery (Trung Phan)
That’s all for today.
Blake
Welcome to The Sandbox Daily, a daily curation of relevant research at the intersection of markets, economics, and lifestyle. We are committed to delivering high-quality and timely content to help investors make sense of capital markets.
Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.