July Almanac & Vital Stats: Top Month in Post-Election Years By: Christopher Mistal & Jeffrey A. Hirsch | June 22, 2017 | Email | Print

 

July begins NASDAQ’s worst four months and is the third worst performing NASDAQ month since 1971, posting a 0.4% 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 1010.33 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 advance of 0.47%. S&P 500 has advanced 85.7% of the time (average gain 0.45%). NASDAQ has been slightly weaker at 76.2% (0.28% average gain). No other day of the year exhibits this amount of across-the-board strength which makes a case for declaring the first trading day of July the most consistently 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 day after. Russell 2000 is negative on the day before and the day after.

 

 

Post-election year Julys rank at or near the top of all post-election year months. DJIA and S&P 500: +2.2%, #1 (since 1953); NASDAQ (since 1973): +3.4% and Russell 2000 (since 1981): +3.1% #2. Delving deeper into this data reveled that many of these past “hot” Julys were preceded by a flat or down first half of the year so there is no guarantee that this July will live up to its historical post-election year record again this year.