May 2011 Review, June Preview
I love the month of May for so many reasons … I love the way the market becomes so predictable, I love to teach during this month because it gets real busy but most of all, I love the change in seasons and cycles with the sectors and industries changing leadership and the fall of commodity prices from their highs … yes, it happens every year and if you only realized that this year, then I have to ask you “Where have you been?”
On 3 May, WAT48 graduated after 8 solid weeks of the tutorial. Now they’re going to Roy & Co to get fried further for another 8 weeks!
WATPG03 had a great weekend at Cititel Hotel and graduated on 9 May.
WATMY14 graduated from the weekend tutorial on 16 May … actually on 17 May at 1:30am.
Late on 22 May, WA26 graduated after a mind-rocking weekend. Great bunch of students with some very high-flying professionals amongst them. It was an honor to be able to share with them and teach them something new.
MARKET MATTERS
DJIA 29 May AMC
If last year is any indication of what June may present, then I am afraid that things may not look so rosy. Going on the common sense assumption that last year’s economic status was not much better than this year’s situation, that earnings last year and this year were equally woeful after the end of the second quarter’s earnings season and that we have hardly a hope for a third round of quantitative easing as inflation is higher than last year … I reckon the market will give us more downside in the months to come as growth contracts more than expected and may even threaten to go into negative.
Employment will be a keenly watched issue and it has barely improved since last year as Initial Claims hover precariously above that fear zone of 450 to 500 thousand and unemployment teeters just below 9%.
I will be watching for that dip and if I should get it I will then be watching for that Right Shoulder by October that should complete a Head and Shoulder pattern from the start of the year to the end of the year.
JUNE TRIVIA
The end of June brings an end to Quarter 2 and the end of the best eight months on the NASDAQ.
- The week after Memorial Day has been down 7 of the last 14
- June is the second most bearish month of the calendar year after September.
- The first trading day of June had been up on the DOW 10 of the last 12
- The first two days of June are the most bullish of the month
- But the first week of the month is rather bearish
- Non Farm Payrolls Friday in June is reliably bearish
- The week before June Expiration Week is traditionally bearish
- Monday of Expiration Week has been down 8 of the last 13 on the DOW
- The middle of Expiration Week in June often sees some bullish respite during bull markets
- But June Expiration Friday has been down on the DOW 7 of the last 12 with average losses of -0.5%
- The week after June Expiration Friday has been down 11 in a row and 18 of the last 20 with average losses of -1.2% on the DOW
- The end of June often sees the market suffer “Portfolio Pumping” – a phenomenon often seen in the last minutes of the trading session.
- June ends poorly with the last day down 14 of the last 19 on the DOW and 6 of the last 7 on the NASDAQ
Commodities;
- Crude stays long in June but Nat Gas should move lower and find a bottom
- Gold and Silver continue their slides but should bottom out and bounce up after mid-June
- Copper starts a rally mid June
- Wheat should hit a low while Corn goes into a decline and Soyabeans top out. (Go long on Wheat week 2)
- Go long on Cocoa and short Coffee
- Accumulate Sugar at the end of the second week of June
SUMMARY
I don’t hold much confidence in the broader market as we go into June and will be focused on cyclical securities and safe havens while I continue hedging against my long positions.
In June, I get my long awaited break and much anticipated vacation. It has been a long and busy year so far and I am so looking forward to this. Maybe I’ll get a chance to get going on my next book as it is way overdue.
Trade Safe & Happy Hunting Always!
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Hi Conrad,
I’ve read your book on secrets of millionaire investors and found it very useful. Your story also inspired me alot. I’ve started trading since dec last year and have been finding out how i can learn more on the skills and techniques until i found your website. I notice you have the WAT course. How do i register for it and is there any preview sessions for it? Thanks and have a great week ahead!