For all the headlines about this being the best June since 1997, it surely does not feel like it. The devil is in the details. The Dow Jones Industrial Average (DJIA) opened the month at 12,455 on June 1 and closed at 12,880 a gain of 425 points (3.4%). The total gain is attributable to two of 21 trading days; June the 6th when the Dow gained 287 points, and June the 29th, the last trading day of the month, with a gain of 278 points (2.2%). The remaining 19 trading days account for a negative 140 points.
If this does not qualify as a June "swoon", I don't know what does.
The picture was much the same for the Nasdaq (COMP), which gained a total of 125 points (5%) for the month; 85 points on June the 29th, and 49 points was on June the 6th. The other 19 trading days account for a negative 9 points. The S&P 500 (SPX) gained 84 points (4.8%) for the month, 33 points on the final day of the month, 30 points on the 6th of June and the remaining 21 points over a four day period from June the 14th to the 19th. Incidentally the S&P 500 closed at almost exactly the same on June 29th (1362) as it did on June 19th (1358) but not until it had swung down to 1309.
With the markets in a funk for 19 out of 21 trading sessions surely the argument for taking a summer vacation still does make sense. Besides, it is extremely difficult to make money in a directionless market even with the wide daily ranges. Remember "the trend is your friend" mantra. Well, a non-trending market is not a trader's friend.
The markets seemed to discount bad economic data, and both rallies were fueled by optimism that the European crisis was resolved. The earnings season is due shortly and will bring macroeconomic issues and fundamentals back to the forefront. My guess is the 2-day June rally is going to be undone as quickly as it came, proving that it was in fact a fluke. Ultimately, as in years past, those who reduced their positions in May and went away will have missed absolutely nothing; the markets are still down from their April closing.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
