In the analysis of last month, we commented that surely at some point we will hear the famous phrase “Sell in May and go away” being uttered, in relation to the theory that between the months of November and April the growth in the stock market is higher than the average growth between May and November. Consequently, this phrase recommends closing our positions and waiting for the summer period to pass to resume our activity.

At the moment it does not seem that this will be fulfilled, since if we look at the main stock indexes, we can see how during the months of May and June they have continued to rise, except for some specific exception as we can see below.

European indices:

• IBEX35 in June lost 3.58%, half-year rise of 9.26%
• DAX30 in June rose 0.71%, half-year rise of 13.21%
• CAC40 in June rose 0.94%, half-year rise of 17.23%

American indices:

• DJI30 in June lost 0.08%, half-year rise of 12.73%
• SP500 in June rose 2.22%, half-year rise of 14.41%
• Nasdaq in June rose 5.49%, half-year rise of 12.5%

At the moment, it seems that the market is buying the Version of the Federal Reserve in relation to inflation seems somewhat transient and, along with future expectations, thanks to the improvement of the situation of the pandemic due to the vaccination process, it seems that the outlook is generally positive. Despite this, we will have to be attentive to the possible measures taken by the different central banks, in the face of the rebound in inflation and the current stimulus programmes.

 Nasdaq Analysis

There is no doubt that over the last two months this has been one of the major players in the market, due to the uncertainty created around inflation in the United States. The month of May was one of the few exceptions, after it closed the month in negative after losing 1.53%, whilst in June, it experienced a rise of 5.49% leading the Wall Street market.

If we look at the daily chart, we can see that these rises have led the NQ100 again to mark new all-time highs, after finally overcoming on June 22 its previous resistance level that now acts as its main support in the red band close to 14,000 points.

Since that time, the price has experienced a strong upward momentum, despite the accumulated overbought that we can see in its stochastic indicator. This has led the price to trade away from its main support levels (average of 18 blank sessions and red stripe) so it is not out of the question that the price may enter a lateral movement. It could even make a correction in order to gradually alleviate this accumulated overbought.

If the market continues to buy the discourse of passing inflation, then this index can continue with the rises, although we will have to be very attentive to the future decisions of the Federal Reserve and the Jackson Hole symposium next August, as we could see a change in monetary policy.

The economic recovery in the United States continues its course after last Friday we learned the NFP in which we could see that the United States had created 850,000 jobs last June compared to the 700,000 jobs expected by the consensus of analysts, although the unemployment rate rose to 5.9%.

Such mixed data has sparked some euphoria, which has caused sharp rises, leading the NQ100 and SP500 to mark new all-time highs. Despite strong job creation (which impacts inflation), investors took the bad unemployment rate data as a sign that possible FED measures could be delayed.

Source: Daily Nasdaq chart of Admiral Markets’ MetaTrader 5 platform from August 18, 2020 to July 5, 2021. Held on July 5 at 13:00 CEST. Note: Past performance is not a reliable indicator of future results or future performance.

Evolution of the last 5 years:

• 2020: 43.64%
• 2019: 35.23%
• 2018: -3.88%
• 2017: 28.24%
• 2016: 7.50%

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