What You Need to Know
- The S&P 500 historically rallies in the two quarters following sharp two-quarter declines.
- July tends to be a good month for stocks, strategist said.
- Shallow bear markets typically reach bottom at seven months.
LPL Financial’s strategic and tactical asset allocation committee has raised its equity allocation by three percentage points to 65% this month as the firm sees cause for optimism for the second half of the year.
“We fully understand the bear case right now and acknowledge optimists are scarce,” LPL Equity Strategist Jeff Buchbinder said in a blog post yesterday. “But based on the market’s track record after sharp downdrafts and favorable seasonal forces in July, we think now may be a good time for those with some dry powder to nibble at this market.”
The 65% equities allocation compares with a 60% benchmark, he noted.
History appears to favor a bullish view now, according to Buchbinder.