Here’s How You’ll Profit From the Worst Trading Month of the Year…

The month of August hasn’t been very kind to investors recently.

But that’s all about to change…

The slowest trading month of the year might have begun with a whisper. But if recent history is any indication, it’ll end with a bang.

Let me explain…

I spent a few days with family last week instead of staying glued to my computer screen. As it turns out, I might have miscalculated my absence. The summer stock market snooze fest actually began in earnest yesterday.

The major averages remained stuck in a tight range to start the week. Trading volume was virtually non-existent. If you think the fanfare last month surrounding new all-time highs was pathetic, just wait until you get a load of August…

Welcome to the summer stocks market doldrums.

That’s right—it’s officially “beach week” for the stock market. The adults have left Wall Street’s trading floors and given the interns the keys.

We’ve all heard tales of the painfully boring summer trading months. Nothing important is supposed to happen in July and August. The movers and shakers are living it up in the Hamptons and trading rooms are quiet, right? Stocks don’t get off the mat in August. So shouldn’t I leave comforting glare of the monitors and hit the beach?

Not so fast…

Sure, there is some truth to the summer doldrums tales. July is the beginning of the Nasdaq’s worst four months of the year. And according to the Stock Trader’s Almanac, August is the worst month for the Dow, S&P and Nasdaq since 1987.

Surprised? Not if you were conscious just four short years ago during the first eurozone trip to panic-town. The swift crash of late-July and August knocked the S&P within a hair of a legit 20% correction in 2011:

Chart 1

What about more recent years? A tame July led to a modest August rally in 2012. The market gave back almost all of its July gains in August 2013. And a late July dip was eagerly bought in 2014.

And you remember what happened last summer. The summer of 2015 was a doozy for investors. After an uneventful July, the market started to unravel in late August, falling double digits before the end of the month and triggering our Dow Theory sell signal that precluded six months of downright terrible trading conditions…

Chart 2

The late summer months certainly have been very interesting over the past few years. And after a painful start to 2016, we now have a breakout to new all-time highs courtesy of the major averages. Sure, it was a difficult start to the year. But it looks like the next six months could really turn up the heat.

Even though no one is bothering to pay attention, the major averages have surged to new all-time highs. All of the risks folks are chirping about aren’t slowing down the major averages. We told you yesterday that all the concerns over Europe, China, Turkey, Zika virus, earnings, or economic growth are just more bricks for the wall of worry the market continues to climb. Meanwhile, we’re riding fresh breakouts and booking double-digit gains.

So much for the summer doldrums…


Greg Guenthner

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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