We were bullish heading into last month. And, my goodness, what an amazing month it was for the bulls.

The stock market performed better this past June than during any other June over the past 20 years. The S&P 500 gained almost 7% – in just one month. For the quarter, the stock market ended up almost 4%.

Add to that the gains during the first quarter of the year and the market is up more than 17% so far in 2019. That’s one of the best first-half performances EVER.

Of course, that’s the good news…

The bad news is that these sorts of first-half results often lead to steep declines during the third quarter of the year.

For example, if we take 2019 out of the mix and look at the top five first-half performances of the past 60 years, the S&P 500 fell an average of 7.5% during the third quarter in four of those five years.

The one year that showed a gain in the third quarter was 1987. The S&P rallied 7.3% in the third quarter that year.

It then CRASHED in October. The market lost nearly 25% in just one day.

So, traders might want to consider being a little cautious as we kick off the third quarter of 2019.

I’m not outright bearish yet. I don’t even have any short exposure yet. In fact, I’ve been telling subscribers to my Delta Direct blog service it’s too early to be aggressively short the market. The stock market usually performs pretty well the first week of July.

But, if history is any sort of a guide, the market is likely to be lower at the end of September than where it is today.

So, traders ought to be looking to take profits into any rally this week. And, once we get “extremely overbought” conditions on some of the technical indicators we regularly follow here in Market Minute, traders should look to add short exposure.

Best regards and good trading,

Jeff Clark

P.S. Just a reminder… If you haven’t submitted your questions for next week’s live Q&A, you should do so now.

These Q&As are one of your few chances each year to hear my unfiltered outlook on the market. I’ll even share what I think will be the top trading strategies to use this year and beyond.

It’s on Thursday, July 11 at 2 p.m. And, if you submit your questions in advance, they’ll be at the top of my list. Write your questions to me here, and look out for an email later this week explaining how to access the session.  

Reader Mailbag

 What is your trading strategy going into the third quarter? Are you bearish… or does this market have much further to run?

As always, write in your thoughts… along with any other questions or comments… to [email protected].