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Despite A Late June Correction, Stocks Rise 8+% In The First Half

Louis Navellier profile picture
Louis Navellier

Most market measures fell in the last week of June, but they were up surprisingly well in the first half of 2017. For instance, the NASDAQ Composite was down 2% last week but up over 14% year-to-date. The more volatile NASDAQ 100 was down 2.7% last week, but is still up 16.1% YTD. The broader blue-chip S&P 500 was up 8.24% (or 9.34%, including dividends) in the first half - a near-20% annual rate.


Technical analysts do not like the fact that the NASDAQ 100 made a new near-term low last Thursday, but market retests are common. One key metric is trading volume. I like to see volume being exhausted on each subsequent retest. Other retests of this new low are possible, but it is also possible that this was the final capitulation day! I must stress that when technology stocks correct, the money is not leaving the stock market - it is just being reshuffled to other industry groups, like the embattled energy or financial sectors. To me, these rotational corrections are the best kind of corrections, so there is no need to panic.

June is historically a weak stock market month, but July is historically the best summer month, by far. According to Bespoke Investment Group's "July Seasonality" report (published June 28), the Dow Jones Industrials have risen an average 1.44%, 0.79%, and 1.08% in the past 100, 50, and 20 years, respectively. In the same report, they show that the performance of the S&P 500 tends to surge in mid-July as earnings announcement season heats up. Earnings help to fuel a lot of market excitement in the second half of July.

Last Tuesday, my favorite economist, Ed Yardeni, reported that the S&P 500 dividend payout ratio in the first quarter remained at about 50%. Dividends totaled $400 billion, while stock buy-backs added another $508.1

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Louis Navellier profile picture
Navellier & Associates was founded by Louis Navellier in 1987 and since then has guided thousands of investors by applying our disciplined, quantitative investment process to a broad range of equity products. Every day, investors hire Navellier to manage their assets in a private account, mutual fund, or defensive portfolio. For over 25 years, we’ve been zeroing in on opportunities for long-term growth. We employ a veteran team of investment and client service professionals who deliver exceptional, personal service and industry-leading information to our clients. _________________________________ Important Disclosures that Accompany Navellier & Associates Articles: *Navellier may hold this security in one or more investment strategies offered to its clients. None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation of any offer to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The reader should not assume that investments in the securities identified and discussed were or will be profitable. Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for you. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. One cannot invest directly in an index. Results presented include the reinvestment of all dividends and other earnings. Graphs are for illustrative and discussion purposes only. Although information has been obtained from and is based upon sources Navellier believes to be reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. All opinions and estimates constitute Navellier's judgment as of the date of the report and are subject to change without notice. This report is for informational purposes and is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. Any decision to purchase securities mentioned in this research must take into account existing public information on such security or any registered prospectus. Past performance is no indication of future results. FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not intended or written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

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