Saying Goodbye to Quarter 2

This is the last week of the 2nd quarter and traditionally when the summer season begins on Wall Street.  Between now and Labor Day the investment class will be more worried about where they will be spending their weekends.  The upper echelons of this group will only emerge from their favorite watering holes to either finish up a big deal or to help steer the ship in the event of an unlooked for crisis.  The investment class cares more about lowering their handicaps or where best to fish or eat during the next 60 days than they care about stocks.  Trading slows down over the summer and markets take on a more sleepy feel unless something unexpected washes over the transom.  

As well we'll soon be bidding the first six months of 2019 adieu.  Markets are set to open slightly higher and based on past history one should not be surprised if the next 10 days are generally positive for stocks.  Institutional money managers have a strong incentive to bid assets higher at the end of each quarter {fees and performance} and there's usually strong money flows at the beginning of a month.  Next week should be quiet in the markets as trading will be shortened by the 4th of July holiday.  Markets will only be open a half day on Wednesday and the "B-team" will be on most trading desks on Friday.   

Recently I discussed past historical patterns of seasonal weakness.  If we see anything like  the historical patterns that have come to be associated with this then under that theory stocks should peak in this current move higher somewhere in mid-July.  From there than traditionally it's been rough sledding for stocks until sometime in the fall.  Of course there is no law that says this pattern will take place this year.  It is entirely possible we'll see something different.  I point this out for readers of this blog to be aware of how this has worked in the past so as not to be surprised if it shows up sometime this summer.  

TV and print pundits will note the many cross currents pushing and prodding stocks right now. There's Iran, there's the trade war with China, immigration, the beginning of the 2020 presidential cycle just to name a few issues.  Also depending who you listen to the economy is doing great or others proclaim we're beginning to slow down and a recession is possible.  There are always cross currents in markets.  The important thing for most investors is to keep focused on the long term and their own unique investment plans.  Stocks will rise and fall.  We've chronicled time and time again that stocks typically experience at least one correction between 7-15% every year.  We've already had one of those this spring.  As I noted to you in my May letter "Seven Trends That Make Me Feel Optimistic About the Markets," there are simply too many longer term positives out there for me not to think there is a higher probability of stocks advancing over these next few years than not.   

Pay attention to these longer term trends, especially in times of heightened volatility as that will give us opportunities to add to positions we like.  In the meantime remember that Wall Street for the most part will be calling a time out until after Labor Day.

Goodbye 2nd quarter and welcome to summer!

Publishing schedule.  Wednesday, Friday this week.  Tuesday, Friday next week.