Australian Investment Blog

What does June usually bring for the Australian index? So far, "sell in May and go away" is having a poor time, with the ASX200 up almost 3% for the month and only two trading days remaining. We have discussed a few times the vagaries of individual stock movements in June as we approach the end of the Australian financial year, but today we are going to look closely at how the index performs both in and throughout June for any clues to how investment decisions should be skewed over the coming weeks. The monthly chart below shows that the we have experienced 5 decent tops in April / May, since the GFC (not this year), but June does not initially standout with an obvious trend. Since the GFC bottom in June 2009, the ASX200 has fallen 5 out of the 7 years for an average loss of close to 90 points, or ~2%. Not a surprising outcome, considering the reputation of "sell in May". It's clearly easy to see why the bears are getting excited when we combine this statistic with the elevated valuations of local stocks, plus the geopolitical risks looming. ASX200 Monthly Chart Subscribers to Market Matters know we remain bullish US equities, targeting fresh all-time highs in 2016, but we are open minded to its direction over June. The main reason we are bullish short / medium is the sheer weight of cash on the sidelines. Investors are underweight equities, which is not the typical circumstance for a decent top - not surprisingly China remains a scary wildcard for us. S&P500 Monthly Chart We spent a few hours scouring the internal characteristics of trading for the ASX200 throughout June since the GFC with a little success.
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