Shares to Take pleasure in Continued Financial Restoration, Seasonality a Concern

Dow Jones, S&P 500, Nasdaq 100 Speaking Factors:

• Seasonality could drag on worth motion because the summer season doldrums weigh on market exercise
• Tight buying and selling ranges usually are not inherently bearish, nevertheless, and the broader basic panorama stays encouraging

The Dow Jones, S&P 500 and Nasdaq 100 entered the third quarter on the again of one more robust displaying within the post-pandemic period as shares continued to climb throughout all sectors. With the broader financial restoration set to offer a modest tailwind for the main indices, fairness buyers should negotiate seasonality considerations, financial coverage adjustments and infrastructure spending as they try to nail down the finer particulars driving inventory valuations within the coming quarter.

Whereas the overall fairness panorama is basically conducive to additional positive aspects, seasonal headwinds could look to constrict worth motion and gradual makes an attempt larger. Since 1990, the S&P 500 has seen a few of its lowest buying and selling quantity in July, August and September; and if the tail finish of the second quarter was any indication, worth motion could dry up throughout markets with out a new set of catalysts.

Chart 1: S&P 500 Common Month-to-month Returns & Common Month-to-month VIX

Supply: Bloomberg

Decrease quantity and volatility usually are not completely bearish elements by any means, however they will make it harder for worth breakouts to happen and for follow-through to happen if a breakout does materialize. To learn the complete Fairness forecast together with the technical outlook, obtain our new 3Q buying and selling information from the DailyFX Free Buying and selling Guides!