July 4th Bullish Pre-Holiday Trade, Bearish After | Jeff Hirsch

Trading the three days ahead of the July 4th Independence Day holiday has historically been stronger than the days after the holiday. Trading on the day before and after the holiday is often lackluster. Volume tends to decline on either side of the holiday as vacations begin early and/or finish late. Since 1980, DJIA, S&P 500, NASDAQ and Russell 2000 have recorded net losses on the day after.

 

 The first Trading Day of July is the most Bullish Day of the Year.

This has become more pronounced in recent years and was the case again last year. However, over the past thirteen years since 2011, trading after Independence Day has softened notably. DJIA has declined ten times in 13 years on the day after. S&P 500 has slipped eight times. Average performance remains fractionally positive. NASDAQ and Russell 2000 have more up days after the 4th but R2K averages losses the two days after the 4th.

Reference:
Jeffrey A. Hirsch (June 28, 2024) - July 4th Bullish Pre-Holiday Trade, Bearish After. 

See also:

Jeffrey A. Hirsch (June 26, 2024) -  Are We Due For A Little Mean Reversion?

Jeffrey A. Hirsch (June 24, 2024) - Nasdaq’s Midyear Rally from around June 26 to July 12.

 Sergey Tarassov (Jun 25, 2024) - DJIA Longterm Forecast Review. 

Allen Reminick (June 25, 2024) - High in US-Stocks July 3-5 and Pullback into July 14-26.

Wayne Whaley (June 17, 2024) - The Summer Rally.

Tom McClellan (March 29, 2024) - Crude Oil's 10-Year Leading Indication for US Stock Market.

Robert C. Miner (January 31, 2024) - The S&P 500 and the Election Year Cycle.

 

July Best S&P & NASDAQ Month Last 21 Years - nearly all gains in first 13 trading days | Jeff Hirsch 

Are We Due For A Little Mean Reversion? | Jeff Hirsch

I remain bullish on 2024. My 2024 Annual Forecast released on December 21, 2023 is on track, yet the market has already achieved (and slightly surpassed) my Base Case Scenario of average election year gains of 8-15%. While my Best Case Scenario of 15-25% is likely now in play with the market running well above any of the historical seasonal patterns I can concoct, the market may be due for a little reversion to the mean.

The charts here illustrate the three most relevant seasonal patterns: All Election Years, election years with a Sitting President Running for reelection and my STA Aggregate Cycle, which is a combo of all years, election years and the 4^th year of the decade (years ending in 4). The Midyear Rally I discussed early this week is still in play. But after that around mid-July, I would not be surprised if the market were to pull back toward the mean a bit, maybe 5-8%.

There is plenty on the near-term horizon to spook traders from election campaign and political missteps, to Fedspeak, economic data disappointments and just plain old Summer Doldrums. 

Quoted from:

Jeffrey A. Hirsch (June 26, 2024) -  Are We Due For A Little Mean Reversion?

 

See also:

Jeffrey A. Hirsch (June 24, 2024) - Nasdaq’s Midyear Rally from around June 26 to July 12.

 Sergey Tarassov (Jun 25, 2024) - DJIA Longterm Forecast Review. 

Allen Reminick (June 25, 2024) - High in US-Stocks July 3-5 and Pullback into July 14-26.

Wayne Whaley (June 17, 2024) - The Summer Rally.

Tom McClellan (March 29, 2024) - Crude Oil's 10-Year Leading Indication for US Stock Market.

Robert C. Miner (January 31, 2024) - The S&P 500 and the Election Year Cycle.

Nasdaq’s Midyear Rally from around June 26 to July 12 | Jeff Hirsch

In the mid-1980s tech’s influence in the market began to grow and the market’s focus in early summer shifted to the outlook for second quarter earnings of technology companies. In anticipation of positive results, over the last three trading days of June and the first nine trading days in July, NASDAQ typically enjoys a rally. 

 

This 12-day run has been up 30 of the past 39 years with an average historical gain of 2.5%. Look for this rally to begin around June 26 and run until about July 12.

After the bursting of the tech bubble in 2000, NASDAQ’s mid-year rally had a spotty track record from 2002 until 2009 with three appearances and five no-shows in those years. However, it has been quite solid over the last fourteen years, up twelve times with two losses. After struggling in the bear market of 2022, NASDAQ resoundingly rebounded last year to gain 4.1% compared to a total July gain of 4.0%.

Quoted from:
Jeffrey A. Hirsch (June 24, 2024) - Christmas In July: Tech Weakness Setting Up NASDAQ’s Midyear Rally.

 

See also:

Wayne Whaley (Jun 22, 2024) - An encouraging study for the Summer Bulls.
Wayne Whaley (June 17, 2024) - The Summer Rally.
Jeffrey A. Hirsch (June 17, 2024) - June’s Quad Witching Options Expiration – A Volatility Haven.

TPR (June 20, 2024) - Cosmic Cluster Days | July 2024.