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Could the Broad Decline in June Be a Contrarian Indicator?

June has been the worst performing month of the year for the Dow in recent years, and that trend clearly has not been broken this month, with the index currently down 4 percent in June – by far its worst monthly performance this year.


Although every S&P 500 sector has averaged a decline in June since 2000, there have been only 12 instances (prior to this month) where all 10 sectors finished the month in negative territory.

June has been the worst performing month of the year for the Dow in recent years, and that trend clearly has not been broken this month, with the index currently down 4 percent in June – by far its worst monthly performance this year.


In another strong indication of this month's losses, a mere 48 of the S&P’s 500 stocks (10% of the index) are up this month. That’s the S&P’s fewest advancing stocks since May 2010, when just 35 stocks rose for the month.

The Dow’s 30 stocks aren’t faring any better, with just 2 stocks up in June (Microsoft and McDonald’s ).

Could the breadth of this month’s decline be a contrarian indicator?

Standard & Poor’s Rich Peterson notes that just before the market bottomed at the beginning of March 2009, the S&P only had 75 companies advancing the month before (February 2009). And the last time the index saw fewer than 100 advancing stocks in a month: June 2010 – the US markets hit their 2010 lows.

Indeed, in the past 5 years, there have been 6 instances where less than 100 stocks in the S&P 500 posted a monthly gain.


Data source: CNBC Analytics and Capital IQ.
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