July Wrap-Up: After 4-Month Gains, Will August Fall into Which Scenario?
As July trading officially comes to a close, U.S. stocks delivered a solid "summer report card": $NASDAQ(.IXIC)$ rose for a fourth consecutive month, gaining 3.70% in July. $S&P 500(.SPX)$ climbed 2.17%. Market sentiment remains supported by crypto strength and AI-driven optimism.
🗓 A Look at Historical Trends: August Isn’t Bearish, but Volatility Tends to Rise
When July ended with gains, August followed with gains 14 times — a 70% probability.
However, August is also one of the most volatile months seasonally, especially in post-election years, where the first eight trading days tend to be weak.
⚠️ But it’s September that truly earns the “danger month” title:
In the past 24 years, 15 Septembers ended in decline. August often acts as the starting point for risk-off behavior.
Tom Lee noted: “When July performs strongly, August often sees short-term pullbacks.”
⚠️ A Pullback Isn't Necessarily a Bad Thing: But Are You Ready?
Several potential risks remain on the radar:
August 1: Some U.S. tariffs take effect, potentially disrupting markets.
Uncertainty around tariff policy, a Federal Reserve on hold, and elevated S&P 500 valuations may trigger a pullback. Seasonal weakness in August and September could amplify single-day volatility.
SPY seasonality chart
💬 From an Investor’s Perspective, Now Is a Critical Juncture
Here are some data points to consider (2000–2024):
Total Green August = 15; Total Red August = 10
1. If the July was green, August was green 14 times.
2. If the July was green, August was Red 6 times.
September on the other hand was Red 15 times.
2025 will either follow Scenario 1 or 2 — What’s your guess?
Questions for You:
Do you think August 2025 will continue the rally or start a correction? Why?
If the market corrects by 10%, will you buy more, hold, or reduce exposure?
Which sectors or ETFs are on your August watchlist or potential dip-buy list?
Can you tolerate a 10–20% drawdown in the next month?
Or would it be wiser to lock in gains and wait for the next buying opportunity?
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If the market drops 10%, I’d likely buy more — especially in sectors like SOXL, tech ETFs like QQQ. A 10–20% dip doesn’t bother me if fundamentals remain strong. I use dollar-cost averaging and see pullbacks as long-term opportunities. It's all about staying focused on the bigger picture, not reacting to short-term noise.
I won’t lock in profits just yet, but I’m watching for signs of weakness in September. If needed, I might trim exposure and keep some cash ready. For now, I stay invested but prepared.
@Tiger_comments @TigerStars
The stock markets need to return to the normal trends. Most of the markets have rocketed up for months especially US markets.
Just like a balloon, if we continue inflating it, it will eventually burst.
Burst or deflated, the damage is very much different.
So, currently I choose to unlock profits and accumulate my cash.
A 10% market pullback is likely to be a buying opportunity, as long as there are no major signs of economic deterioration
Sectors such as semiconductors, energy, cybersecurity, and dividend-focused ETFs are worth monitoring for potential opportunities
Locking in some gains is a wise move and a prudent strategy amid potential market dips。。。
Tag :
@Huat99
@Jinleong @Pang Kiat , what's your thoughts?
If marker corrects by 10%, I will prefer to hold as it will be just a few more months to the Santa rally and there might be rate cut end of the year. It would still be too expensive for me to buy more.
I would be monitoring VTI and SMH if potential dip buying.
A 10% might be possible given current valuation but 20% would be worrying.
It depends on one’s investment horizon. In the longer run, market tends to go up and so the saying of time in the market more than timing the market. This was just proven with the recent sharp drop with trump’s liberation day. I would prefer to watch portfolio proportion to manage risk.