To The Moon

A Bullish Outlook for the S&P 500 in June 2025

As we step into June 2025, the financial markets are buzzing with anticipation following a remarkable 6.15% surge in the S&P 500 during May, marking it as the best-performing month of the year so far. This impressive rally, coming on the heels of April’s sell-off, has reignited optimism among investors and sparked debates about the relevance of the old adage, “Sell in May and go away.” Historically, June has not been a standout month for the S&P 500, with data since 1980 showing it has never been the top-performing month of the year. However, I am bullish on the S&P 500 for June 2025, and here’s why.

The Momentum Carries Forward

The 6.15% gain in May is a strong signal of underlying market strength. This surge suggests that investors are confident in the economic recovery, corporate earnings, and the broader macroeconomic environment. Momentum is a powerful force in financial markets, and the positive sentiment from May is likely to spill over into June. While seasonal patterns might suggest a slowdown, the current trajectory indicates that the market could defy historical norms. The S&P 500’s ability to rebound from April’s sell-off and post such a robust gain demonstrates resilience, a key characteristic of bull markets. This resilience, coupled with improving economic indicators—such as potential stabilization in inflation or continued growth in consumer spending—sets the stage for continued upward movement.

Breaking the Seasonal Curse

The saying “Sell in May and go away” has long been a guide for investors to avoid the traditionally weaker summer months. However, this adage has become less reliable in recent years as global markets evolve and diversify. Last year, the market ignored this advice, and the same could hold true in 2025. June’s historical underperformance—averaging a modest 0.5% return since 1980—may not apply in a year where economic fundamentals are strong. With the S&P 500 already showing strength, June could be an exception, driven by new catalysts such as better-than-expected corporate earnings reports or supportive monetary policy from central banks. The market’s ability to adapt to changing conditions suggests that seasonal patterns are becoming less predictive, paving the way for a bullish June.

Macroeconomic Tailwinds

Several macroeconomic factors support a bullish outlook for June. If inflation continues to moderate—potentially due to effective policy measures or a cooling in commodity prices—central banks, including the Federal Reserve, might maintain or even ease interest rates. Lower interest rates reduce borrowing costs for companies, boost investment, and support stock valuations, all of which are positive for the S&P 500. Additionally, the global economy appears to be on a recovery path, with emerging markets contributing to growth and reducing reliance on U.S.-centric performance. Corporate earnings, a critical driver of stock prices, are likely to remain robust, especially in sectors like technology and healthcare, which have significant weight in the index. These tailwinds could propel the S&P 500 higher, potentially delivering a 2% to 4% gain in June.

Technical Indicators Favor the Bulls

From a technical perspective, the S&P 500’s recent breakout above key resistance levels in May signals strong bullish momentum. The Relative Strength Index (RSI), while possibly nearing overbought territory (above 70), does not yet indicate an immediate reversal. Instead, it reflects a market with strong upward momentum that could sustain itself with periodic consolidations. Support levels around the 5,200 to 5,300 range (based on recent trends) provide a safety net, allowing investors to weather minor pullbacks. A successful test of these support levels could lead to a reacceleration of gains, pushing the index toward new highs. This technical setup reinforces the case for a bullish June, as the market appears poised to build on its recent success.

Long-Term Confidence

For long-term investors, the bullish case extends beyond June. The S&P 500 has a proven track record of delivering positive returns over extended periods, averaging around 10% annually over decades. The current rally is part of a broader bull market that began in late 2023, following the post-pandemic recovery. As long as economic growth remains steady and no major geopolitical shocks occur, the upward trend is likely to persist. June 2025 could serve as a stepping stone, consolidating gains and setting the stage for further advances in the second half of the year. This long-term perspective encourages holding positions rather than succumbing to short-term seasonal fears.

Investment Strategy

For investors, this bullish outlook suggests a proactive approach. Long-term holders should maintain their positions, perhaps adding to their portfolios during any minor dips to average down costs. Short-term traders can capitalize on the momentum by targeting a range of 2% to 4% gains, with stop-loss orders set around 2% below entry points to manage risk. Diversification across sectors—particularly into growth stocks in technology and value stocks in industrials—can enhance returns while mitigating volatility. Monitoring key data releases, such as employment reports or inflation figures, will be crucial to staying ahead of market movements.

Conclusion

In summary, June 2025 presents a compelling opportunity for the S&P 500 to defy its historical underperformance and deliver solid gains. The momentum from May, supportive macroeconomic conditions, favorable technical indicators, and a long-term bullish trend all point to a positive outcome. While seasonal patterns and potential overbought conditions warrant caution, the market’s adaptability and current strength suggest that the “Sell in May” adage may be outdated. For investors willing to embrace this optimism, June could be a rewarding month, marking the beginning of a stronger second half of 2025. Stay informed, stay disciplined, and let’s ride this bullish wave together!