That’s according to a major stock analyst, who’s taking a very cautious outlook toward stocks. CNBC has the details:
Chris Verrone, a technical analyst at Strategas Research Partners, said in a note Tuesday that stocks are “approaching the more difficult stretch of the calendar.”
Verrone included in his report a chart (which we’ve reprinted with his permission) showing the average performance of the S&P 500 and the Nasdaq-100 index from July to October the last 30 years. A composite shows both typically trade lower during this upcoming period.Source: Strategas
With gold and bonds rallying a similar amount this year as stocks have, market participants are clearly not completely sold on equities, argues Verrone. If they were, we’d see stocks rallying while safehaven assets stay flat or down — which would follow the normal historic negative correlation between these asset classes.
Of course, today’s environment is anything but normal. The Fed is raising rates and planning on unwinding its multi-trillion dollar balance sheet, and no one’s quite sure what the ramifications will be.
Most analysts agree that technology stocks have run too far as of late, however. As those stocks have clearly led the major U.S. averages higher, continued volatility in that sector could certainly be a catalyst for a midsummer swoon in the wider markets.
The SPDR S&P 500 ETF (NYSE:SPY) rose $0.41 (+0.17%) in premarket trading Thursday. Year-to-date, SPY has gained 8.93%, versus a % rise in the benchmark S&P 500 index during the same period.