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Buzz & Banter



One of the more consistent seasonality biases seen in the market is positive action the last day of the month and the first few days of the new month. For instance, on the last trading day in July (which happens to be today), the S&P 500 has closed higher, 68% of the time since 1950. The next day (the first trading day in August, which is tomorrow in this case), the S&P has closed higher 51% of the time.

What's interesting, however, is that if the S&P bucks its positive seasonality and closes lower on the last day in July, then there has been only a 24% chance that the first day in August will close positively. Conversely, and more apropos to today's market, if the S&P kicks into high gear and closes up more than 1% on the last day in July, then the first day in August has also closed higher 80% of the time, with an average return of 0.3%. We can't read too much into that last statistic, however, as there have only been 5 occurrences, but it at least hints that today's positive bias (if it holds into the close) could continue tomorrow. Obviously, the econ numbers due tomorrow will have infinitely more impact than some arcane statistics, but the market may have some wind at its back if this positive action continues.

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