Futures Forecast for July: Risk-Aversion Returns, Doldrums May Follow

We’re seeing a bit of fear and profit-taking in early July in the equity and commodity markets after a strong second-quarter performance. Remember the adage: “sell in May and go away?” Perhaps this year we are getting a delay. Let’s take a look at what July might have in store for some of the major markets, and possible trading strategies.
In the second quarter, the “green shoots” were starting to develop in the economy, and stocks and commodities were the beneficiaries. The S&P 500 ended the quarter up 15.2 percent, its best quarterly performance since 1992. The U.S. dollar fell 5.5 percent in value, and most commodities saw bullish trends. The Dow Jones-UBS Commodity Index, which represents a basket of 19 commodities, finished 12 percent higher for the quarter. Among individual commodities, crude oil saw a 41 percent rally, the biggest quarterly gain since 1990. Copper rallied 23 percent and was up 62 percent on the year. Sugar hit a three-year high the last trading day in June, and is up about 50 percent on the year. (more)