Monday, June 3, 2013

Keystone' June Seasonality

The "Sell in May and Go Away" adage appears in the back half of May this year with the SPX logging two consecutive down weeks, the first time this has occurred since November. The month of June is typically up about +0.2% on average so a flat to small gain would be expected for this month. The largest stock market gains are made from November thru April, not so much May thru October. The tech sector slows thru the summer. The homebuilders tend to be weak April thru July. The Dow tends to underperform this month for the first year of the presidential cycle.

June is the kickoff to the Hurricane Season.  The season ends in early November. When a hurricane starts moving across the Atalntic Ocean headed for the East Coast or Gulf, oil and natty gas prices typically escalate in response to oil rigs and terminals shutting down for the storms.  Home-supply stores such as HD and LOW typically move higher as hurricanes approach.  The news channels will run video clips of patrons leaving the stores with plywood (to board up windows), generators and other storm preparedness items to whip up the excitement. GNRC supplies generators.  URI supplies rental equipment once the storm clean-up begins.  Also take a look at insurers such as ALL. Other possible hurricane plays are HRC, NUE, OC and TTC.  Electric and energy grid companies are worth watching as well such as MTZ, MYRG, GE, ENOC, AMSC, CPST, PWR, etc...

June typically hosts many conferences in such sectors as banking and biotech with traders already positioned ahead of time.  The ASCO cancer conference and ADA diabetes conference occur this month so tickers such as JNJ, CELG, SPPI, BMY, AZN, ALKS and others are worth a look. Markets have been down 20 of the last 22 times for the week after June triple witching, this is the week of 6/24/13. Russell 1000 and 2000 rebalancing typically occurs at the second to last Friday which would be 6/21/13 this year causing lots of volume and movement in the tickers affected for the end of the month. June is the official end to the second quarter, EOQ2, and the end to the first half of the year, EOH1. Window dressing comes in to play to end the month of June since it is quarter and half-year end, so typically market buoyancy occurs in the final week of June. This conflicts with the down week expected after OpEx so this year the OpEx week of 6/17/13 may be weaker than expected moving into the window dressing. The last couple days of June typically finish flat.  Thus, the back half of June is typically weak the week after OpEx but then markets recover moving into the end of the month. Markets tend to develop a trading range for the summer months. June is typically a bad month for the XHB, XLI, XLF, XLP and XLY sectors and considering the bullish runs they have, traders may exit stage right.

Keystone's Eclipse Indicator targets 6/10/13, give or take two weeks, as an area where a major market top may occur.  There is a major Bradley turn date on 6/22/13 so this opens a window from 6/14/13 through 6/28/13 for a market trend change. Taking a look at the timeline ahead;

6/3/13; New money typically comes into the markets the first couple days of the month.
6/3/13; ISM Mfg Index.
6/5/13; Beige Book
6/6/13; ECB Rate Decision and Press Conference.
6/7/13; Monthly Jobs Report.
6/8/13; New moon, markets are typically weak moving through the new moon.
6/13/13; Retail sales and Business Inventories.
6/14/13; PPI, Industrial Production and University of Michigan Consumer Sentiment.
6/17/13; Empire State Mfg Survey and TIC data.
6/18/13; FOMC meeting begins.  Housing Starts and CPI.
6/19/13; FOMC Rate Decision and Press Conference.
6/20/13; PMI's, Philly Fed and Existing Home Sales.
6/21/13; OpEx Quadruple Witching.
6/22/13; Major Bradley Turn date.
6/23/13; Full moon, markets are typically bullish through the full moon.
6/24/13; Window dressing now thru Friday but the week after June quadruple witching is usually down. Earnings pre-announcements.
6/25/13; Consumer Confidence and New Home Sales.
6/26/13; GDP.
6/28/13; University of Michigan Consumer Sentiment. EOM. EOQ2. EOH1.

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