Investors could get some volatility relief this month.
Wall Street has just entered a historically quiet month, according to Sam Stovall of CFRA Research.
“June is really a lackluster month in terms of average returns [and] in terms of the frequency of the advance, “the company’s chief investment strategist told CNBC’s” Trading Nation “on Tuesday.
But Stovall urges investors to face boredom. He warns that June could prepare the market for a July swoon.
For the year, Stovall sees the “zigzag” pattern as the historical market trend that is most likely to repeat itself this year. His appeal is related to the market’s very strong start to the year and the nervousness about inflation.
“History says these strong starts usually end with good ends,” said Stovall. “In the meantime, however, we are experiencing some volatility as the market adapts – trying to figure out whether it should continue to advance or retreat.”
Stovall, who has been on Wall Street since 1985, is one of the biggest bulls in the market. Its rolling 12-month target for the S&P 500 of 4,620 implies a 10% increase from current levels and new record highs.
“We use history. We use fundamentals. We even use technical data to come up with that number,” he said.
Stovall sees a mix of robust earnings and strong GDP growth as major bullish catalysts.
“Ultimately, investors will conclude that stocks remain the asset class of choice,” said Stovall.
The S&P 500 was practically unchanged on the first day of trading in June, closing at 4,202.04. The index has risen nearly 12% so far this year.
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