First Trading Day of July Continues Its Streak

The first trading of the second half has put together a remarkable streak over the past two decades.

Yesterday’s big lift made it 15 of the past 18 years that July’s first trading session has been in the green. Market’s also enjoyed triple-digit Dow gians on that day in 2002, 2004 and 2007.

Most mutual funds end their fiscal year on Spetember or October 30th, so this represents a major opportunity to redeploy and reposition assets prior to the year end.

I was out of the loop most of yesterday, but Bill King noted — via the CME — that Merrill Lynch was an aggressive buyers of SPUs, both yesterday and Friday near the NYSE close.

As noted in our Sunday linkfest, equity markets close at 1pm today, and the bond traders get cut loose at 2pm.

Enjoy your holiday!

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  1. Radhes commented on Jul 3

    Barry You wrote:

    I was out of the loop most of yesterday, but Bill King noted — via the CME — that Merrill Lynch was an aggressive buyers of SPUs, both yesterday and Friday near the NYSE close.

    My comment:

    Forgive me for my ignorance, but what are SPUs.


  2. adam coleman commented on Jul 3

    SPU is a structured product put out by Morgan Stanley thats linked to the S&P 500. These are relatively new securities… pretty sure they are in the exchange traded note category… dont know how liquid they are. The only site with good info on them I could find, and has the prospectuses for alot of these things is:
    Hope its ok to post the link, no beef intended Barry. I’d be interested in hearing other peoples thoughts on these things as this is the first I’ve heard of them too. Have a safe and memorable 4th folks!!! (and lets get away from these monitors!!!!!!!!!!)

  3. G commented on Jul 3

    So the question is why?
    SPU is bought to magnify returns of an average market. So is Merrill simply betting on an average market gain, or are they desperately trying to make up for some other loss on their balance?

  4. vegaman commented on Jul 3

    Excuse me but SPU’s are S & P 500 futures, in old CME pit speak.

  5. stanleyb commented on Jul 3

    My theory is it has nothing to do with market fundamentals, and everything to do with the Plunge Protection Team reacting to the London Bombings over the weekend by propping up the markets… again.

    If only the terrorists would stop attacking us, the PPT might actually allow a bear market to happen. Every terrorist bomb is another market rally –paid for by the PPT.

  6. Winston Munn commented on Jul 3

    Of note is the following from Russ Winter: “…commercial paper issuance over the six months from December to June, grew at almost 17% annualized rate as commercial paper generated credit to the tune of $167.3 billion literally screamed into the system about as fast as it could be created. Astonishingly $107.7 billion of this occurred in the last two months!”

    Was there suddenly a liquidation sale on undervalued companies? Did anyone see a “buy one get one free” sale on M&A deals?

    Note the time frame – the past 6 months – just the time that the subprime credit market and mortgage market was realing.

    Coincidence? I think not. More on the line of required, in my opinion. Ponzi finance is based on debt creation to pay off existing debt – debt creation is a necessity. When the supply of mortgage debt creation withered, a new source of debt became mandatory to continue the scheme.

    Fiat money is debt. If there were no debt, there would be no money. Debt has interest to pay, which means new money must be created simply to maintain the status quo. And around and around we go.

    When the saturation point is reached where there is no asset instrument left to hock, the only options at that point will be to hyperinflate or collapse.

    If the band keeps playing for the next 100 years, it won’t matter to today’s investors. But if the band stops this year or next….

    Is the unequaled risk a sign of complacency, or is it a sign of last minute panic as holes begin to appear in the dyke?

  7. blam commented on Jul 3

    As I watch nightly business report, I realized that we should throw down the guantlet and challange Japan for dominance of the single most important human market; the crapper.
    Think about it:

    What human activity cannot be denied ? That’s right, you guessed it.

    We are starting from deep doo doo, so to speak, but I personally know of certain ethnic persons that have emigrated to the US over the past 100 years with legendary prowess in the art ! In fact, I lived with one such immortal in college and witnessed (?) first hand the daily exposition and mastery of the intricate procedure.

    Yes, some of you are allready muttering, bohunk. And although you may be, by happenstance, correct, this is not a racially motivated polemic. The motivation goes far beyond bohunks, micks, waps, frogs, krauts, (Dershowitz would sue me), cousin jacks, finns, gyspy’s, ruskies, etc.
    and all the other folks who have enriched my life in this greatest of all melting pots.

    Happy 4th!!!

  8. JKB commented on Jul 4

    Well, it does seem that the powder magazine is all packed with every conceivable way to blow up the markets and the powder trail has been laid topside. It remains to be seen what will ignite it. Perhaps the lucky triumvirate (07/07/07) of this Saturday is keeping the hopes alive. Unfortunately, when these fortuitous dates pass there seems to be a bit of turbulence in their aftermath. Or there have been lots of speculation that the terrs are planning a July 4th surprise. Or that the UK attacks signify that AQ is moving out of Iraq to attack in the West.

    Any of these could set off the downturn or we may trundle along until the hedge fund redemption holds expire in a month or three. All in all, while it is still a toss up of when, fewer and fewer doubt that a drop will occur. Just keep pumping those legs but don’t look down. As long as your unaware, gravity is in limbo but it does seem Bugs is about to hand us an anvil for a parachute.

  9. muckdog commented on Jul 4

    The seasonal investing pattern for the first trading days of July is very strong. No doubt about that one. Worked yet again!

  10. Werner.Merthens commented on Jul 4

    That is an interesting observation about the first trading session in July. I wonder whether the 15 ups vs. 3 downs is a) significant and b) robust enough to trade? Are there other such days or time periods.

    I myself have focused more on longer term patterns. A synopsis can be found here:

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