June Can Be A Rough Month For Stocks, Tech And Communication Services Remain Strong

Over the last 20 years, June has emerged as a tough month in terms of stock market performance. Over that time frame, the S&P 500 has experienced upward movement in 12 of those 20 years, accounting for a 60% success rate. Despite that, the S&P 500 has dropped an average of -0.3% in June. This is applicable if trading the SPDR S&P 500 Trust SPY or a similar ETF.

Note that the chart says 2003 to 2022 so it reflects the last 20 completed months of June. Chart courtesy of StockCharts.com.

Over the past 10 years, the S&P 500 has performed a bit better. It has moved higher in seven of the last 10 years (70% of the time) and has averaged a gain of 0.3%.

Turning our attention to other indices for further confirmation, the NYSE Composite has witnessed upward movement in only nine of the last 20 years. That is only 45% of the time, and the index has averaged a loss in June of -0.5%. Over the past decade, the NYSE Composite has experienced upward movement in five out of ten years, with an average June return of -0.2%.

Similarly, the Nasdaq 100 index has shown upward movement in 10 of the last 20 years (50%). On average, this index has lost -0.2% in June. Over the past ten years, the average return has been 0.6% and the index has moved up in five out of those ten years (50%). This would be applicable if trading the Invesco QQQ Trust Series QQQ.

Coming into June, Technology and Communication Services have been the hottest sectors over the last three months. Continue to watch strong stocks within these sectors for trade setups on the long side. While June isn't a great month stocks, it isn't horrible either. Looking down the road, July is often one of the best months of the year for stocks, so having some positions heading into July may not be a bad idea, especially in stocks that are acting well. 

Always control risk with a manageable position size and have an exit point if a trade doesn't work out.