June 2010 continued the downward trend established in May and closed with the Dow down five days in a row. Despite a very bullish beginning, the first half of the year, and the second quarter in particular, finished in the red. Of the major U.S. indices that we routinely monitor and analyze, Dow declined the least with a 10% loss while NASDAQ was worst, declining 12.0% in the second quarter. This abysmal performance was sufficient to earn Q2-2010 Dow, S&P 500, NASDAQ, and Russell 2000 the number 15th, 12th, 20th, and 12th positions respectively on the Worst Quarterly Declines List by Percent Change since 1950.
Looking back over the same time period we found that of the 23 down S&P 500 second, the subsequent third quarter was down 10 and up 13. The average gain for up third quarters following down second quarters was 6.4%. However, the average loss for the 10 declining third quarters was 9.6%. Although there is a slight bias toward the positive, the third quarter is most likely going to be flat to down unless there is a miraculous recovery in the U.S. labor market and a substantial improvement in economic data in the near future.(Source: STA 2010)
Looking back over the same time period we found that of the 23 down S&P 500 second, the subsequent third quarter was down 10 and up 13. The average gain for up third quarters following down second quarters was 6.4%. However, the average loss for the 10 declining third quarters was 9.6%. Although there is a slight bias toward the positive, the third quarter is most likely going to be flat to down unless there is a miraculous recovery in the U.S. labor market and a substantial improvement in economic data in the near future.(Source: STA 2010)
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