US Stock Market Outlook For June 2017

In this stock market outlook for June 2017, we will look at what the markets have done and what investors and traders should expect for the month of June. With all 3 major indexes breaking out into all time highs, what should we expect as we begin the month of June 2017?

The month of June has traditionally been a month that does not bring much gains. February, April, May, July, Oct and November for the past 5 years gave investors some of the biggest gains. So, we do not expect much from June which has a history of closing higher 60% of the time but with an average negative loss of 0.1% for the past 5 years. (Some years close higher but there may be a year or two it close very low which skew the data)

Having said that, seasonality is just there to aid us. With stocks breaking out of a long consolidation and making all time highs, we have to adjust with the flow and be flexible like a reed. That is what a good trader should be. Disciplined in taking setups but flexible to adapt and change in order to benefit the most from what the market tells us we should do.

First of all let us start of with the seasonality charts for the past 5 years.

stock market outlook june 2017Seasonality Chart Of S&P 500 index courtesy of Stockcharts.com

Looking at the 5 years seasonality chart of the S&P 500 above, we can see that the index followed the script perfectly well with April and May recently closing higher than it opened. These kind of seasonality pattern is very important for traders and investors because when the market falls to a support during these months, a trader can take confidence that a bottoming pattern will follow through and the market will bounce back up to close higher than its open. That is what we experienced recently in May 2017.

What we have seen in the May drastic crash is quickly followed by an equally fast rebound that astounded many many market participants. But those who do seasonality analysis and support and resistance and also trend analysis will know that the general direction is still up.

From what the data above is telling us, June might not be a very good bull month for the S&P 500. With it closing higher 60% of the time with a small loss of 0.1%, this might not go down so well with investors. However, we need to look at it through the eyes of the indexes making all time highs. With no overhead resistance, there is a possibility that the market may continue to make strong gains.

Perhaps what might happen is a nice bull run 1-2 weeks and then a correction to support area closing near the opening price in June. Then, perhaps there might be a rebound and a move higher in July which seasonally is good for the S&P 500. For July, S&P 500 has a 75% chance of closing higher with average gains of 2.2% for the past 5 years.

This is just an educated guess but it is just too broad. Which is why we still need to do daily stock market analysis to determine the strength and health of the 3 major indices.

Seasonality Chart Of Dow Jones Industrial Average index courtesy of Stockcharts.com
Seasonality Chart Of Nasdaq Composite index courtesy of Stockcharts.com

By studying the above 3 seasonality charts for SPX, Dow and Nasdaq Composite, we know that history has always been good to the stock market in the coming months of July, October and November. At least for the past 5 years. So as long as the stock market is in a strong weekly uptrend, I believe that they will most probably follow through and repeat history.

With that in mind, let us now look at what the charts of major indexes and other commodities are telling us. All of them are weekly charts except Apple and gold which I showed the daily charts. Since we are looking at a longer term picture and a monthly stock market outlook of the stock market, it makes sense to look at the weekly chart of these indices.

As you can see from the 3 charts of major indices of S&P 500 index, Dow Jones Industrial Average and the Nasdaq Composite index, they are all in a major weekly bullish uptrend. I'm a big believer in trend following. Sometimes a lot of smart people will try to do all kinds of analysis but over the years I have noticed that practitioners of trend following like Ed Seykota and many other great fund managers come out on top. 7 Reasons Why Trend Trading Beats All Other Trading Strategies

The basis of trend following is you follow the trend until it ends. So, since we are in a daily and weekly uptrend, we remain bullish until the charts tell us so. Therefore, our focus is still on longs.

Too many analysis and data crunching will usually cloud the mind. Sometimes its just futile to look at 100 different stock market indicators and economic indicators. You end up will analysis paralysis and in the stock market, the older you get, the simpler you want things to be. Simple is the best.

If you look at the charts carefully, you will notice that the S&P 500 and Nasdaq has already broken out of a weekly box decisively. They are now in a new frontier and higher highs are to be expected in the near future. The Dow is breaking out, not quite yet but we can say that it has overcome the previous intraday high and that is at least a good thing.

As long as the Dow stays above the 21000 in any correction, I am inclined to believe that all 3 indexes will move higher and higher. The weekly boxes that these indexes have overcome will now act as strong support areas.

  • The way to play US stocks right now is to buy breakouts or break downtrendline. Either daily breakouts or breakouts in smaller time frames. One can also play the breakdowntrendlines in smaller time frames.

While the major indexes may not move much, there will be tons of stocks that will be breaking out in many different time frames and the astute trader will learn to spot these kind of breakouts.

Looking at the globe or world as a whole, we want to use the MSCI ACWI index fund. It tracks about 2500 stocks all over the world. As you can see from the chart above, this index is in a weekly uptrend and things look healthy for the index. Therefore, world market participants should be bullish. Recently the index broke above a box and that is a very very good thing.

Meanwhile, the biggest stock with the largest market cap in the world is trying to break out of a daily pennant. Looking at Apple is crucial for all stock market investors around the world. Where Apple goes, so does the whole world. This prestige only comes to a few stocks in the world and one of them is Apple.

I believe if the pattern follows through and if it breaks out even higher, Apple will push the Dow Jones higher and also the Nasdaq. Tech stocks all over the world will also benefit from this breakout.

Gold has been moving higher lately and it just broke above the handle in the daily cup and handle. As long as it remains above the handle, things look good for Gold in the short term. There might be some resistance in the 1300-1310 area.

The UK is going though a lot at the moment. With the elections around the corner, this nation has suffered quite a lot in the hands of terrorist. One might even imagine if the terrorist attack will reshape the political landscape in UK and push the incumbent government out. But if history is correct, Theresa May and the conservative government will remain in power with an increase in majority in Parliament. How Stock Markets Around The World Have Correctly Predicted Elections 80% Of The Time

Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com

Charts with the investing.com logo are courtesy of Investing.com powered by Trading View

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