Second quarter corporate results have been solid and encouraging for the most part so far this earnings season, but QE taper discussions remain front page news. Following a brisk retreat from late May through June, the market has done an about face just as quickly as Fed Chairman Bernanke did when speaking about the Fed’s current bond buying activities. As a result, July 2013 is on pace to rack up impressive full-month gains. In the eleven trading days through yesterday’s close, DJIA had gained 3.6% so far, qualifying itself as a Hot July. At its present trajectory, DJIA could finish July with a Top 10 performance when compared to all Julys since 1950.
Gains of this magnitude for July, however, have frequently been followed by a late-summer or autumn selloff and better buying opportunities than now. The table below of big July gains and subsequent declines since 1950 gives you a good look at the kind of buying opportunities that have occurred in the past following full-month July gains in excess of 3.5%.