S&P 500 Forecast for the Week Ahead: The Summer Doldrums Drag On
Jul 1, 2021
By: Peter Hanks
· The S&P 500 has seen some of its tightest daily trading ranges in the last three years this week
· History suggests the trend of low volume and volatility may persist as summer progresses
· Holiday trading conditions may distort upcoming price action - Stock Market 2021 Holiday Calendar
The S&P 500 is on pace for another sleep-inducing week of trade as the effects of seasonality seem to grow stronger. Daily trading ranges have continued to narrow and market activity could be further distorted by the upcoming holiday weekend. The summer doldrums, a trend toward lower volume and volatility this time of year, seem to be in full swing and unfortunately for the more active traders, could persist in the weeks ahead if history is any indication.
To that end, monthly S&P 500 data since 1990 reveals April to September is generally the period with the lowest volume of the year and tends to bottom in August. After a fairly uneventful conclusion to May and a largely inactive month of June, the trend of lower volume and volatility in the summer season seems poised to ring true this year.
With that in mind, market activity could slip to new lows in the coming months as traders grasp for any viable catalysts after almost 18 months of negotiating a novel market environment that saw volatility remain elevated for long periods. Whether recent price action is simply a side effect of investor fatigue rather than the underlying forces of seasonality is yet to be seen, but the trend thus far suggests the latter may carry more weight.
That said, a lack of activity has not translated to a lack of progress for the major indices as the S&P 500 and Nasdaq 100 push to new records – albeit slowly – while the Dow Jones attempts to reclaim a lost trendline that had been crucial in its climb off the pandemic lows. Despite underwhelming price action, the continuation higher is encouraging and suggests the longer-term uptrend in equities remains firmly intact. As markets search for the next catalyst, follow @PeterHanksFX on Twitter for updates and analysis.
Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.
tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.
Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.
Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.