July may be the best performing month of the third quarter, but the mostly negative results in August and September make the comparison easy. Two recent “hot” Julys in 2009 and 2010 where DJIA and S&P 500 both gained greater than 6% and a strong performance in 2013 have boosted July’s average gains since 1950 to 1.2% and 1.0% respectively. This strength inevitability stirs talk of a “summer rally”, but beware the hype, as it has historically been the weakest rally of all seasons (page 70, Stock Trader’s Almanac 2014).
Midterm-year July rankings are something of a mixed bag, ranking #5 for DJIA and S&P 500, averaging gains of 1.2% and 0.8% respectively (since 1950); while NASDAQ (since 1974) and Russell 2000 (since 1982) midterm Julys rank #11 and #12. NASDAQ has only advanced in three of the last ten midterm Julys with an average loss of 2.4%. Russell 2000 has advanced only twice in its last eight with an average decline of 4.3%.
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