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This month's review of historical sector analysis for the month of July has yielded pretty solid results for the overall market throughout the last 25 years. After eliminating the high and low returns for statistical analysis the results showed that the S&P 500 Total Return (NYSEARCA:SPY) has had an average return of 1.13% for the month of July over the last 25 years. Interestingly, the positive years have yielded a much greater return than the negative years move to the downside. This is why the mean return is impressive despite the index only finishing in positive territory 12 times in the last 25 years in the month of July. When the market is right it has been really good.

Unlike historical sector analysis for the month of June, all 11 sectors and the S&P 500 have achieved a mean return in positive territory for the month of July going back to the year 1987. The strongest sector strength has been found in the financials and real estate sectors. They have posted a mean return of 1.61% and 1.44% and both sectors have finished with gains in 16 of the last 25 months of July. The smallest strength can be seen in the technology sector, which should not be surprising since the summer months have usually been a challenge for tech stocks.

July

Cons Discr

Health Care

Energy

Financials

Cons Staples

Technology

1987

6.97%

3.20%

5.81%

0.89%

3.64%

2.42%

1988

-0.05%

-0.09%

0.45%

0.37%

0.71%

-4.81%

1989

8.49%

11.36%

5.41%

6.30%

9.54%

5.16%

1990

-3.02%

0.89%

6.97%

-5.24%

-0.04%

-5.41%

1991

5.36%

7.50%

5.00%

6.32%

4.19%

7.77%

1992

2.51%

5.37%

4.73%

3.28%

3.86%

3.51%

1993

1.52%

-2.46%

-1.76%

1.95%

-1.24%

-1.06%

1994

3.06%

2.47%

1.34%

1.92%

3.36%

3.26%

1995

5.77%

6.83%

2.57%

4.81%

1.10%

9.06%

1996

-8.82%

-8.81%

-4.82%

-1.20%

-1.36%

-8.86%

1997

5.89%

3.01%

7.67%

9.61%

3.52%

12.66%

1998

-2.10%

-1.72%

-12.79%

-1.09%

-3.88%

-1.14%

1999

-3.59%

0.95%

2.75%

-4.17%

-2.34%

-1.21%

2000

-1.94%

-2.46%

-5.16%

6.87%

-1.54%

-4.56%

2001

-1.53%

-2.84%

-3.48%

-0.82%

1.00%

-9.13%

2002

-9.73%

-3.45%

-14.63%

-8.05%

-6.45%

-10.69%

2003

2.44%

3.14%

-3.87%

4.00%

0.40%

5.73%

2004

-5.19%

-7.11%

2.54%

-2.45%

-5.97%

-11.31%

2005

3.72%

5.54%

9.20%

2.71%

3.61%

6.29%

2006

-4.44%

1.94%

-0.46%

0.80%

1.72%

-5.18%

2007

-4.89%

-2.78%

-0.39%

-6.72%

-2.23%

-0.68%

2008

-0.18%

6.54%

-15.75%

4.84%

2.26%

-1.92%

2009

8.34%

6.04%

7.01%

9.44%

8.39%

8.71%

2010

7.31%

2.18%

8.96%

7.31%

7.77%

7.00%

2011

-1.26%

-3.16%

0.68%

-3.10%

-1.33%

-2.63%

Positive Years

12

15

15

16

15

11

Mean

0.69%

1.28%

0.63%

1.61%

1.11%

0.07%

Standard Deviation

4.66

4.00

6.10

4.31

3.47

5.98

July

Telecom

Nat Resources

Real Estate

Utilities

Industrials

S&P 500 TR

1987

3.53%

7.92%

-0.26%

-1.18%

3.74%

5.07%

1988

-0.53%

-0.58%

-0.02%

-0.69%

-2.87%

-0.38%

1989

7.74%

5.88%

3.43%

5.28%

6.50%

6.45%

1990

-3.95%

5.46%

0.66%

0.52%

-2.31%

-0.32%

1991

4.95%

4.43%

0.95%

3.17%

3.58%

4.66%

1992

3.65%

3.56%

2.46%

5.23%

1.41%

4.09%

1993

2.24%

-0.42%

1.95%

1.64%

2.24%

-0.40%

1994

4.70%

2.89%

-0.68%

3.36%

3.70%

3.28%

1995

6.34%

2.93%

1.99%

1.59%

6.72%

3.32%

1996

-7.07%

-4.23%

-0.22%

-4.61%

-8.91%

-4.42%

1997

4.81%

5.33%

4.09%

2.73%

6.94%

7.96%

1998

0.79%

-10.66%

-6.13%

-1.26%

-5.09%

-1.06%

1999

-1.15%

1.80%

-3.69%

-0.32%

-2.03%

-3.12%

2000

-4.56%

-4.30%

7.78%

-0.54%

5.18%

-1.56%

2001

-4.16%

-3.02%

-1.49%

-3.28%

1.28%

-0.98%

2002

-9.16%

-12.20%

-5.15%

-11.12%

-10.86%

-7.80%

2003

0.97%

-1.92%

4.80%

-4.10%

4.83%

1.76%

2004

-5.46%

2.64%

0.65%

0.80%

-3.64%

-3.31%

2005

6.12%

7.44%

6.54%

3.18%

7.27%

3.72%

2006

-2.07%

0.30%

2.77%

3.91%

-7.48%

0.62%

2007

-1.02%

0.26%

-7.05%

-3.57%

-0.80%

-3.10%

2008

-2.10%

-13.26%

2.07%

-6.64%

3.47%

-0.84%

2009

5.93%

6.90%

10.00%

4.97%

10.76%

7.56%

2010

10.00%

8.38%

9.37%

7.48%

11.02%

7.01%

2011

-4.86%

0.50%

1.17%

-1.41%

-6.97%

-2.03%

Positive Years

13

16

16

13

15

12

Mean

0.65%

0.91%

1.44%

0.38%

1.20%

1.13%

Standard Deviation

4.44

5.27

3.72

3.36

5.33

3.58

Hopefully you will be able to come up with some ideas based on the data provided. The generally accepted theory has been to go away in May, but the data actually suggests that over the last 25 years July has been, on average, positive across the board. The fact is more home runs seem to have been hit versus the number of swings and misses.

I use the following ETFs when weighting my Cyclical Sector Portfolio for each coming month:

YTD Return thru 6/20/12

Cons Discretionary Select Sector SPDR (NYSEARCA:XLY)

13.73%

Vanguard Health Care ETF (NYSEARCA:VHT)

10.93%

Financial Select Sector SPDR (NYSEARCA:XLF)

12.72%

Technology Select Sector SPDR (NYSEARCA:XLK)

14.03%

SPDR S&P Telecom (NYSEARCA:XTL)

-1.91%

iShares Cohen & Steers Realty Majors (NYSEARCA:ICF)

11.11%

Consumer Staples Select Sector SPDR (NYSEARCA:XLP)

6.69%

Energy Select Sector SPDR (NYSEARCA:XLE)

-4.37%

Utilities Select Sector SPDR (NYSEARCA:XLU)

3.72%

SPDR S&P Global Nat Resources (NYSEARCA:GNR)

-2.17%

Industrial Select Sector SPDR (NYSEARCA:XLI)

5.60%

S&P 500 Total Return

8.90%

Disclosure: I am long VHT, XTL, ICF, XLP, XLU.