May Was a Bit Overdramatic

There was a basketball player at my high school who was overdramatic. Anytime an opposing player even brushed up against him he would yell in pain and grab his arm. One time someone bumped him, and he threw a hissy fit and called a time out because of his “pain.” That was our last timeout which made us lose the game because we couldn’t stop the clock.

May was overdramatic too but thankfully it’s finished. Unfortunately, June has historically been the worst market month of the year during a midterm election year. Since 1950 June has been down 1.8% on average during midterm years according to LPL Research.

This June might be different because over the last decade it has bucked that trend and been up an average of 1.4% over the past 10 years, making it the fourth-best month. The big bounce in late May might be showing this pattern continuing, which could be the beginning of a summer rally. (Prayers said and fingers crossed.)

I’m optimistic for three reasons. First, the late May market rally ended the 7-week losing streak for the S&P 500 Index. There have only been three other 7-week losing streaks in history and in two of those times (1970 and 1980) the S&P 500 was up more than 33% a year later. The third time was in early 2001 and it wasn’t good a year later because of the recession following 9/11 according to Yahoo Finance.

The second reason I’m optimistic is that the S&P 500 corrected 18.7% before the late May rally. It was painful to endure but if it does what we have seen in similar corrections the future could be good. Since 1980 when there have been corrections of 10-20% the market has been up almost 25% on average a year later and almost 40% two years after that correction according to LPL Research.

The last reason I’m optimistic is that usually when we have a huge gain like the 6.6% gain the S&P 500 had the last week of May it’s usually a good sign for a bull market. Since 1950 when the S&P 500 gains more than 6% in a week it averages up 12.5% six months later and almost 22% a year later according to LPL Research.

It’s been a rough start to 2022. After May’s overdramatic fit hopefully the late May rally stirs up the market bulls for a nice run. With any luck June is the month and since it’s my birthday month I say ice cream cake for all.

Have a blessed week!

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance (IAA), a registered investment advisor.

IAA and Fervent Wealth Management are separate entities from LPL Financial.