Almanac Trader — NASDAQ Hot Julys & Later Buys

In the original research conducted by our illustrious
founder and creator of the Stock Trader’s Almanac, the late Yale Hirsch,
defined a “Hot July” market as a gain of 3% or more for the DJIA. Although DJIA
did not reach this level, up just 0.08% this July, NASDAQ did.

With the lone exception of 1980, every NASDAQ “Hot July”
since 1971 was followed by a retreat that averaged 5.8% from July’s close to a
subsequent low in the second half of the year. The worst decline was 18.4% in
1973 and the second worst was in 2022 when NASDAQ retreated a further 17.6%
before its bear market finally ended in December.

What really stands out in the following table is NASDAQ’s
average retreat after a 3% or greater gain in July is heavily influenced by
four double-digit declines while in other years the retreat was actually rather
mild. The mild NASDAQ retreats were frequently over quickly with eight
bottoming/ending in August. This aligns with our expectations for a relatively
mild pullback or consolidation, most likely sometime during the next two or
three months.