Do Stocks Rally in June?

Lucky No. 7 Dice

Jesus C. we all hope so.  June 2012 could be a comeback month for stocks.

Its June and we just lost all of the gains for stocks in 2012 last month.  Where do we go from here?  Do stocks go even lower or can we finally buck the trend and embrace the bulls?

Historically speaking the month of June has not been good for stocks in general.  There's a reason we used to live by 'Sell in May and go away', this month burned that into our skulls.  Investors have adopted the behavior of exiting the game in May and entering back into equities come October.

The S&P 500 has a -2.3% return when comparing the month of June from 2001 until 2010.  However diving into the rabbit hole and looking at June for the past 40 years it works out to a positive .29% return (data via squirrelers.com).  However history is unfolding as we speak, the result of Greece and the fate of euro could take the market up or down 5% in a heartbeat. 

Since the current bull market began in March 2009, the S&P 500 has had 15 corrections of more than 5% that were preceded by at least a 5% rally, just like this year, notes Liz Ann Sonders, chief market strategist at Charles Schwab.  The average decline of those 15 corrections comes to 8.2%. Since the S&P 500 is currently off 8% from its most recent high, there’s good reason to believe the downside from here will be contained. Sonders figures the current downdraft will remain in the typical 5% to 10% range (investorplace.com).

Mastery is hoping its contributor SC is right on the money with June, his forecast:
The S&P 500 is testing the November support zone, and therefore, is likely to find strength to push higher in the near term.  The June targets are outlined, and June is shaping up to be another volatile month.  With a newly established wall of worry in place now, a strong rally early in June makes sense.

So where to put your money?

Defensive sectors of health care, utilities and consumer staples have historically outperformed from May to October, at least since 1989, according to Schwab and The Leuthold Group.  E3 is this week and that means it could be time for 3 Gaming Stocks to Buy Now (they are trading near record lows).  Maybe its Time to Buy Apple Inc? but above all Be ready for anything.

Let's hope for all of us equities head higher, our 401(k) and personal portfolios could benefit from some positive movement.  Speaking of tumbling down the rabbit hole...