July Almanac, Vital Stats & Strategy Calendar: Best Month of Quarter By: Christopher Mistal & Jeffrey A. Hirsch | June 30, 2015 | Email | Print

 

July begins NASDAQ’s worst four months and is the second worst performing NASDAQ month since 1971, posting just a 0.2% average gain. Dynamic trading often accompanies the first full month of summer as the beginning of the second half of the year brings an inflow of new funds. This creates a bullish beginning, a soft week after options expiration and strength towards the end.

 

July’s first trading day is the fourth best performing first trading day of all twelve months with DJIA gaining a cumulative 852.55 points since 1998. Over the past 21 years, DJIA’s first trading day of July has produced gains 81.0% of the time with an average gain of 0.49%. S&P 500 has advanced 85.7% of the time (average gain 0.45%). NASDAQ has been slightly weaker at 76.2% (0.25% average gain). No other day of the year exhibits this amount of across-the-board strength which makes a solid case for declaring July 1 the most bullish day of the year over the past 21 years.

 

 

Trading on the day before and after the Independence Day holiday is often lackluster. Volume tends to decline on either side of the holiday as vacations begin early and finish late. Since 1980, DJIA, S&P 500, and NASDAQ have recorded net losses on the first trading day after. Russell 2000 is negative the trading day before and after.

 

Pre-election-year July rankings are something of a mixed bag, ranking #7 for DJIA and #8 S&P 500, averaging gains of 1.1% and 0.8% respectively (since 1950); while NASDAQ (since 1971) and Russell 2000 (since 1979) pre-election Julys both rank #10. NASDAQ has only advanced in five of the last eleven pre-election Julys. Russell 2000 has advanced in five of its last nine. Despite tech and small-caps meager pre-election July track record, NASDAQ and Russell 2000 have averaged gains of 0.8% and 0.5% respectively.