Come June, with the bulls stepping aside for a while, a 3-month stock rally could hit a road block. There is still alot of money that could possibly be invested in the stock markert, but the bulls know there is not much coming out this month.
In the coming week there will be few economic reports like April factor orders, April trade balance and the May services sector reports. However none of these reports cause much market movement. Analyst predict not much movement in June, with the occasional up day as more deal news comes out.
Analyst also predict that if there is any pullback in the market, it will be temporary, since the factors that lead to the 3-month stock rally is still intact. Factors like better earnings, company buyback, mergers & acquisitions, steady interest rates, confidence from the Federal Reserve about the economy are all still in place. These factors helped recharge the bulls after a late-February through early March stock selloff that was sparked by worries about a global growth slowdown. The Dow Jones industrial average and the S&P 500 have both risen for 8 of the last 9 weeks. Both ended last week at all-time highs. The Russell 2000 small-cap index is at a record high. The Nasdaq composite is at a more than 6-year high.
Summer, starting with June, tends to be tough for stock investors, as the old "sell in May and go away" expression suggests. It's tough because with fewer traders around, there is less money trading hands and less of an incentive to put new money to work. This June is unlikely to be an exception, particularly as there is little expected in the way of market-moving news other than corporate deals. Q1 earnings are done with and the Q2 earnings reports won't start until next month. The next Federal Reserve policy meeting is not until the end of the month and they are expected to hold steady on interest rates. Most of the major economic reports for the month of June were already released, the 1st day of the month, leaving investors less to chew over in the next few weeks.
All in all, June is going to be the month where bull investors keep away.
(Source: CNN Money)
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