👀 July Seasonality, Election Year Volatility, The Perfect hedge.

Hi guys, it’s Kieran! It’s a holiday shortened week in the markets, but major elections in France and the UK means volatility is expected, and with liquidity thin due to the 4th of July holiday in the US, moves could be magnified.

Before we get started, our friends at PipFarm have set us up with a new HUGE ‘55% off’ promo for July. You can find all the details at the bottom of this mail.

OK with that said, let’s get ourselves prepared for the week ahead:

📢 Prop Firm Industry News

Funding Pips have introduced an interesting new payout cycle concept where you can give up a percentage of your profit split, to get more frequent payouts. A monthly payout cycle pays 100% profit split. WOW! Once you get funded with them, you have the opportunity to choose your payout cycle, however once chosen, this cannot be changed. Very cool idea indeed.

Funded Peaks, who have been facing a major liquidity crisis, have found a new investor and CEO in the shape of Joshua Dentrinos, who previously worked with former industry giant My Forex Funds.

As per Joshua “We expect that all backlogged payouts will be cleared within the next 30 days without interfering with the company's margin accounts and removing its legs.”

A very timey and interesting move. Hopefully they can now pay traders what they are owned and move to stabilize the firm.

🔥 Follow me on X for more frequent prop firm commentary -https://twitter.com/kierangohil_

🕜 Economic calendar

Here are this week’s red folder news events. Lots of market moving events throughout a week where liquidity will be thin. Aside the aforementioned elections across Europe, we’ve got Powel speaking on Tuesday, Unemployment Claims and FOMC minutes on Wednesday and non-farm payrolls on Friday. If you think this is going to be a quiet 4th of July holiday week, think again, be prepared, and if you are trading with firms who have news rules, keep a very close eye on the calendar.

📈 The Macro View

July Seasonality. Sell in May and go away? nope. Based on the last 20 years, July has been the best single month for the S&P500, returning 2.3% on average.

It’s hard to get long at All-time-highs, however…

Since 1955, when the First Half of the year is up +10%:

1. Full year never lower, and up 25.1% on avg.

2. Rest of year up avg 7.7% (median 9.8%) and higher nearly 83% of time.

Volatility in Election years. Before you load the boat with S&P500 longs however, keep in mind that this is no ordinary year. US election years are notoriously challenging to trade, so if you think you can get long and head to the beach, you might be in for a bit of a shock.

In election years we typically see a 25% increase in volatility from July-November, so although we are still a ways out, expect volatility to start creeping up. Volatility equals whipsaws, so keep your stops wide and your risk managed.

How about a hedge? OK so election years are treacherous, anything can happen. Maybe we should hedge for volatility. What can we use?

Our old friend Gold of course.

Over the last 20 years, Gold is up on average 1.7% in July, followed by 1.2% in August. Best time of the year to buy on a technical basis, and with all the madness that likely lies ahead, on a fundamental basis as well.

As ever, not a recommendation! This my analysis and mine alone. Do your own research, stay risk managed and expect the unexpected!

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OK guys, that’s it for this week. I hope you enjoyed the newsletter, stay safe out there and i’ll speak to you next Monday!

Kieran