Trading, stock market, options trading, stock price charts

Plus a look at the top 25 S&P 500 stocks from the past 25 years

Stocks are doing wonderfully this year. By May, the S&P 500 (SPX) only posted double-digit growth for the second time since 2000. However, we are heading for the downward part of the year. The S&P 500 index rose an average of only 0.4% over the past 25 years from June to August. Seasonality doesn’t seem on our side, but what if we break it down another way? I have also listed a few individual stocks that have tended to buck this trend.


Breakdown of the June-August period, historical

In general, the June to August period was bearish for the stock market. This year has been an outstanding year so far. Will the strong momentum tends to continue until May until summer?

The following two tables provide an insight. The first table looks back 25 years and I break down the returns from June to August based on the returns from the start of the year to May. If you look at the double-digit returns through May, you only get three results. So if you look at the times when the S&P 500 was up at least 7.5% through May, the next three months were positive with 63% returns. So it was similar to the typical June through August returns shown in the table above.


If you look further back in history, back to 1950, when the index was up 10% or more through May, then the next three months were better than any other time. These 18 events show an average three month return for the S&P 500 of 2.42%, with 78% of the returns being positive. Looking at the table below, the better the market did in May, the better the market tended to do in the next three summer months.


Similar to S&P 500 years

Here’s an interesting way to look at it. Going back to 1950, I found the January to May charts that most resembled the charts so far that year. The four years that are most similar to 2021 (at least by the method I used) are 1963, 1950, 1995, and 1964. I have the year-round charts for those years below. After the steady growth until May, anything can happen at short notice. In 1995 the S&P 500 continued its upward trajectory for the remainder of the year. In 1950 the stocks gave up all price gains over the next few months and in the other two years the index meandered sideways for a while. A common feature of all four of these years is that the stocks were higher each time at the end of the year.


Here is some data from the 10 years with the most similar chart compared to this year. The 10 years that looked closest to 2021 so far saw an average growth of 12% for the remainder of the year, with all 10 positive. That is very promising. Other years saw an average gain of 3.7% for the remainder of the year, with 67% of the returns being positive.


Years when the S&P 500 had a chart path like this did well in the short term. Over the next three months, the 10 years that looked most similar to this year, the index gained just over 3%, with 80% of returns being positive. In other years, the S&P 500 gained just under one percent with around 60% positive returns.


Stocks that defy the trend

Just because the S&P 500 struggled over the next several months doesn’t mean there weren’t any buying opportunities. The following table lists the top 25 S&P 500 stocks over the past 25 years for the three months June through August. Holdings took at least ten years of data to be considered. Several popular technology names, including Apple (AAPL), Microsoft (MSFT), and Google (GoogL) have made the list.



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