When the S&P500 Posts a Solid Gain in the Final Trading Days of the Month

During the last three trading days of May, the S&P500 gained just over 1%.
Historically, when the market posts a solid gain in the last few days of the
month, this buying power usually carries over into the first few days of the
following month. The table below lists each of the last thirty occurrences in
which the S&P500 gained 1% or more in the last three trading days of the
month, followed by the S&P's performance three sessions later...

S&P500 Gains 1%+ Last Three Trading Days of Month
05/30/08... S&P500 ??? three sessions later
01/31/08... S&P500 -3.0% three sessions later (*)
11/30/07... S&P500 +0.3% three sessions later
08/31/07... S&P500 +0.3% three sessions later
01/31/07... S&P500 +0.6% three sessions later
11/30/06... S&P500 +1.0% three sessions later
06/30/06... S&P500 +0.3% three sessions later
10/31/05... S&P500 +1.1% three sessions later
09/30/05... S&P500 -2.6% three sessions later (*)
08/31/05... S&P500 +1.1% three sessions later
02/28/05... S&P500 +0.6% three sessions later
10/29/04... S&P500 +1.2% three sessions later
09/30/04... S&P500 +1.8% three sessions later
03/31/04... S&P500 +2.2% three sessions later
12/31/03... S&P500 +1.1% three sessions later
08/29/03... S&P500 +2.0% three sessions later
05/30/03... S&P500 +2.4% three sessions later
04/30/03... S&P500 +1.1% three sessions later
07/31/02... S&P500 -8.5% three sessions later (*)
06/28/02... S&P500 -3.6% three sessions later (*)
03/28/02... S&P500 -1.9% three sessions later (*)
09/28/01... S&P500 +3.0% three sessions later
04/30/01... S&P500 -0.1% three sessions later
10/31/00... S&P500 -0.2% three sessions later
05/31/00... S&P500 +3.3% three sessions later
10/29/99... S&P500 -0.6% three sessions later
06/30/99... S&P500 +1.1% three sessions later
05/28/99... S&P500 -0.2% three sessions later
01/29/99... S&P500 -0.6% three sessions later
10/30/98... S&P500 +1.8% three sessions later
04/30/98... S&P500 +0.4% three sessions later

Note that in only five cases out of the past thirty did the S&P500 drop 1%+ in
the three days following end-of-month strength. Those five cases ended up
leading to a drop in the 2%+ neighborhood, indicating that when this end-of-
month strength setup fails, it tends to fail significantly. But in most cases,
the S&P trades flat-to-up in the days following end-of-month strength. And
with the S&P already down 1% after Monday's selloff, this suggests the
potential for a bounce heading into mid-week.

Categories : Archived EOD Commentary, End-of-Day Commentary

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