Summer 2016 Q&A

SYNOPSIS

So, who else is getting fed up with the media calling the equity stock price appreciation since mid-February “The World’s Most Hated Stock Rally!”. Do any of us hate the fact that our portfolios have exploded in value over the past few months? Are we begging for it to stop, because we’re running out of room to store our profits? Would we feel more comfortable, if we could just start losing money again? No, I think the media are hating this rally because they’ve been drinking their own cool-aid. They sold all their stocks long ago and kept telling us that stocks are over-valued and will come crashing down any day now. Then, they selectively talk to guest analysts who agree with them and repeat that message.

But this time investors have ignored the classic “sky is falling” message, and stock prices keep rising. Investors are calm, cool and collected, as is evident from the near-record low VIX numbers. There is no “fear factor”. But let’s be a little cautious here. It just could be “media hate” that is driving stock prices higher. If that’s the case let their hysterical rage continue until they all die of heart attacks, strokes or exhaustion!

Last Week in the Indexes… All of the major market indexes took a breather last week, with one-week changes being slightly positive or negative or practically zero. But the trend values of all seven indexes remain decidedly positive, with S&P/TSX Venture Index and S&P/TSX Small Cap Index retaining their leading positions.

Below you will find answers for some of the most commonly found medical illness generic viagra no prescription called erectile dysfunction. If the impact is less, and nervous system is undeterred then Kamagra Soft medicines can assist retaining erection power for 4 to 6 hours viagra online on its oral intake. In fact, meeting once a week with a licensed therapist purchase cheap cialis can straightforwardness sexual anxiety and endow with strategies to boost up understanding. When your system is bombarded which includes a large beauty salon in which the cialis in india price girls will learn how to look pretty. PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) actually rose a bit to 484% from 471% in our last report. The S&P/TSX Composite Index APAR is up a few points to 31% , and the S&P 500 APAR lost a point points to 21% from a week earlier. The chart below also contains the five-year median results for these three measures. You can see that all readings are still above the long term averages.

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We were fairly active last week… selling four positions and adding three new ones. No panic selling… just rotating out of highly profitable positions with trends that have become tired into some new ones where the trends are just getting started.

PTA Perspective… Summer 2016 Q&A

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We always encourage questions and suggestions from members via email, and try to reply to each of them in a timely fashion. When our replies to some of those questions look like they may be of interest to other readers as well, we set them aside to include in an occasional Q&A session. This week we’re running one of those as our PTA Perspective Feature.

Seasonality in Perspective

SYNOPSIS

The Dow, S&P 500 and Nasdaq keep hitting new highs, although we haven’t seen any big moves upward in a while. The big question is who is buying? We’re told that the money managers consider stocks over-priced, and the retail investors are sitting on cash. Meanwhile there is no volatility, which means no one is scared about impending declines in equities. Very mysterious indeed! So, what’s an investor to do? Why not just sit back, watch the profits roll in?

Last Week in the Indexes… Canadian small caps as tracked by the S&P/TSX Venture Index and S&P/TSX Small Cap Index continue to charge ahead and increase their trend values, while US and Canadian large cap indexes lose ground.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) has retreated to 471% from 524% in our last report. The S&P/TSX Composite Index APAR is down a point from last time at 27% , and the S&P 500 APAR has dropped 4 points to 22% from 26% a week earlier. In the chart below, you can also see the five-year median results for these three measures. All readings are still above the long term averages. Since the PTP score is so far beyond where we’ve ever seen it (since tracking the PTP this way), we’re totally contented with our profits to date, and the potential for more of the same.

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One stock sold last week; two new ones added.

PTA Perspective… Seasonality in Perspective

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Although seasonality effects are a recurring feature in TrendWatch Weekly, we’re making it the featured topic this week. We have no doubt that the success rates of various recurring patterns are real, but are the sizes of the effects big enough to really make a difference? And, assuming that there was an easy way to take advantage of all of the major calendar effects, would you real beat the market benchmarks? Well, there is actual ETF that implements seasonal gains, and we’ll tell you all about it!

Foreign Investing: Case Study – Brazil

SYNOPSIS

Since the Brexit bro-ha-ha, volatility in the equities markets has been virtually nonexistent, and several major indexes keep hitting new highs. We get the usual “stocks are over-valued” blah-blah-blah in the media; but even if that’s true, stocks can stay over-valued for a very long time, before reverting back to long-term averages (or below those). Also, there seems to be no shortage of opinions on just what “over-valued” means. And, finally, with no way of earning profits in the bond markets, where are you going to invest?

Last Week in the Indexes… Canadian small caps as tracked by the S&P/TSX Venture Index and S&P/TSX Small Cap Index are still at the top of the trend rankings. It’s been a phenomenal run, yet S&P/TSX Venture Index (just the average performance in stocks in that composite) is still rising at 1.7%/week… about 88% annualized!

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) has retreated to 524% from 601% in our last report. The S&P/TSX Composite Index APAR is unchanged from last time at 28% , and the S&P 500 APAR declined slightly to 28% from 30% a week earlier. In the chart below, you can also see the five-year median results for these three measures. All readings are still above the long term averages.

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There is definitely a viagra free sample strong link between heart disease and erectile dysfunction. This is a powerful anti-impotency drug and it is as effective as genuine Pfizer made viagra generic wholesale . This medication should be purchase generic levitra greyandgrey.com consumed once in a while cause a delayed (e.g. more than 4 hours) or excruciating erection. After you’re done, make sure prescription order viagra without that you dispose of the used cucumber properly lest your wife finds it and includes it in arriving at decisions. We sold one PTP holding last week and added two more. We’re still heavily weighted in precious metal mining stocks (the driver of record-breaking PTP performance), but are also dabbling in Health Care and Information Technology stocks in the US, which are favoured sectors right now (in addition to the long-standing Materials success story in Canada).

PTA Perspective… Foreign Investing: Case Study – Brazil

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All eyes are on Rio these days as the Summer Olympics 2016 are now underway. But that’s not the only reason to set your sights on Brazil. If you’ve been following our quarterly summaries and the Regional ETF chart in the Data & Charts Workbooks, you know that Brazilian stocks are as hot as the Brazilian women in those string bikinis! One ETF based on Brazil stocks was already up 30% by the end of the first quarter of 2016. That same ETF is now up 65%. Also, the currency, the Brazilian Real (BRL), has been climbing which means that any investments earlier this year using the local currency will get an extra boost when the stocks are sold and the cash repatriated to the US or Canada. We have lots more on this topic in this week’s full edition. We use Brazil as a case study of how the contents of our Data & Charts Workbooks can help you identify and capitalize on foreign investments when the opportunities present themselves.

Bullseye Profits without Seeing the Target!

SYNOPSIS

The North American markets have slowed their advance a bit, but there’s certainly no cause for concern just yet. Gold stocks have pulled back relatively sharply this past week as the advance in the price of bullion has stalled. The stocks are far more volatile than bullion, so small moves up or down in the precious metal result in large moves up or down in the stocks.

Last Week in the Indexes… The large cap indexes (S&p 500, DJI, S&P/TSX Composite Index) all had losses on a one week basis, while the small cap indexes (Russell 2000, S&P/TSX Small Cap Index and S&P/TSX Venture Index) all had gains. Nasdaq was also improving as tech stocks are gaining some momentum.

PTP… We expected our ProfiTrend Portfolio APAR (annualized price appreciation rate) to pull back further from its 337% reading last week; but it turned around and set yet another new 5-year record high of 601% instead. The S&P/TSX Composite Index APAR eased back to 28% from 33% last week, and the S&P 500 APAR declined to 30% from 37% a week earlier. In the chart below, you can also see the five-year median results for these three measures. All readings are well above the long term averages.

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We sold two stocks last week and added two more. We’re still really heavily weighted in precious metal mining stocks (the driver of record-breaking PTP performance), but are also looking at the improving Health Care and Information Technology stocks in the US for future opportunities.
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PTA Perspective… Bullseye Profits without Seeing the Target!

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Dozens of academic research papers have been published with evidence that the biggest problem that investors face that limits their profit potential is selling too soon, when their holdings are advancing, and holding onto losers with hope that they’ll come back up. This is true of brand new equities investors, those who have been in the game for quite a while, and even professional money managers. The ProfiTrend Advantage framework contains provisions for dealing with both. We’ve tended to emphasize and repeat our strategy for cutting losses short and feeling rewarded for doing so; but this week we’ve set aside some extra time to convince you that you shouldn’t be fearful of letting your profits run. The first thing to do is throw your own profit targets out the window, and ignore any that you find in the media and analysts’ reports.

Seasonality in August… Overall, August is among the worst performing months of the year… often attributed to peak holiday season, and minimal investor interest in trading. Although four sectors outperform the S&P 500 in August on average (Utilities, Consumer Staples, Health Care and Information Technology), only Utilities has an average gain (+0.6%) vs a loss in that month. More detail in the main body of this week’s edition.

Happy 400th Edition to Us!

SYNOPSIS

The North American markets have slowed their advance a bit, but there’s certainly no cause for concern just yet. Gold stocks have pulled back relatively sharply this past week as the advance in the price of bullion has stalled. The stocks are far more volatile than bullion, so small moves up or down in the precious metal result in large moves up or down in the stocks.

Last Week in the Indexes… All seven major indexes that we track had continuing gains last week, with one exception. The S&P/TSX Small Cap Index dipped again last week… this time by a full percentage point. The small cap advantage, that we’ve seen for months, appears to be dissipating, while Nasdaq stocks are improving.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) finally retreated from 510% last week, to 337%. The S&P/TSX Composite Index APAR is at 33% (the same as last week), and the S&P 500 APAR declined slightly to 37% from 39% a week earlier. With our current chart format below, you can see the five-year median results for these three measures.

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With no trading in the PTP this past week, our “speedometer” is reflecting a speed-bump in our heavy exposure to gold stocks. And, no, that isn’t an argument for diversification.
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PTA Perspective… Happy 400th Edition to Us! We’re celebrating! Sort of. This is somewhere just past our 400th edition of TrendWatch Weekly! But actually, that’s just a small part of the story. This is roughly our 400th edition, but only since we switch to our current WordPress blogging platform in early 2008. Our story, however, goes back to about 1997. We began our humble efforts with a weekly report on technology stocks, then spun-off TSE 300 TrendWatch Weekly in 1998 to include trend and consistency values for all 300 of those stocks. Tallying everything up, across software platforms that have come and gone, we’ve probably published over 1000 editions of some variation on TrendWatch Weekly.

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The word “blog” had yet to be invented back near the beginning, and it was quite a task doing weekly updates. The whole web site had to be edited weekly. We have more of our story in the body of this week’s edition, and also introduce some new features at the PTA web site that you might find useful.

Investor Confidence Index for July 2016… SSICI Dips below 100 for First Time since Fall 2013
The latest State Street Investor Confidence Index (SSICI) has just been reported for July 2016. The Global ICI decreased to 98, down 7.7 points from June’s revised reading of 105.7. The decline in sentiment was driven by a decrease in the European ICI from 100.3 to 92.4. The North American ICI also dropped by 5.9 points to 99.9 along with the Asian ICI falling 5.2 points to 108.

The Folly of Forecasting

SYNOPSIS

The North American markets continue to march higher leaving new all-time highs for the S&P 500 and Dow Jones Industrials in their wake. Brett talk won’t stop; but at least it’s being totally ignored by investors, which is just as well.

Last Week in the Indexes… All seven major indexes that we track had continuing gains last week, with one exception. Oddly the S&P/TSX Small Cap Index dipped just 0.1% over the week, even while the S&P/TSX Venture Index continued to move higher. The trend value rankings continue to favour small caps, as they have for many months now.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) set another new record as of last Friday at 510%, above last week’s 490%. The S&P/TSX Composite Index APAR is up 10 points to 33%, and the S&P 500 APAR rose to 39% from 31% a week earlier. With our current chart format below, we include the five-year median results for these three measures.

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We really didn’t expect another gain after last week’s record high, but we’ll take it for the “high-speed profits” it represents.
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PTA Perspective… The Folly of Forecasting

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Do you pay much attention to analysts’ forecasts, when it comes to where the indexes might be by year-end, or a year from now? How about the price targets they set for individual stocks? How about consensus estimates, where forecasts from a number of analysts are combined? If you do any of those things, you should quit wasting your time. We explain why from several perspectives.

 

New Bull Market in British Stocks?

SYNOPSIS

The business media still haven’t made up another scary story to tell, so coverage of the Brexit bullshit continues, even while international equities markets push higher. In fact the leading equities index in the UK, the FTSE 100 is up +3.68% since the close on referendum day, June 23. That compares with a meagre +0.5% for the S&P/TSX Composite Index and -0.1% for the S&P 500. So, tell us again how those major UK companies will move to Europe, and/or see their revenues and profits decline sharply? Obviously stock buyers don’t agree. More on this in our PTA Perspective feature.

Last Week in the Indexes… All seven major indexes that we track had continuing gains last week… from 1.1% (DJI) to 4.6% (S&P/TSX Small Cap Index). All index trend values are positive. Small caps continue to gain in value far faster than large caps.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) rose to a record-breaking 490% as of Friday from an already staggering 242% in the last report. The S&P/TSX Composite Index APAR dropped a few points to 23%, and the S&P 500 APAR, rose from 20% to 31%. With our new chart format, we include the five-year median results for these three measures. Our new all-time high is due to a confluence of positive factors, which we explain in detail in the ProfiTrend Portfolio section.

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PTA Perspective… New Bull Market in British Stocks?

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Although we didn’t see any media coverage, our own calculations tell us that the Financial Times Stock Exchange 100 Index (FTSE 100, pronounced “Footsie 100”) has entered a new bull market as of Friday. Think about that, Brexit whiners! More details in this edition of TrendWatch Weekly.

Diversification is for the Ignorant!

SYNOPSIS

What a difference 4% makes? It was roughly 52% Leave, 48% Stay in the Brexit vote last Thursday. Although we played down the net impact (on North Americans) for either outcome last week, it was perhaps inevitable that the somewhat surprising Leave decision would rock the world on Friday. Let’s just hope that the media don’t create even more hysteria, and drive even more investors out of the markets again this week. Logically Friday’s reaction was grossly overdone. More on this in the full edition.

Here’s a 60 second video from Washington Post on the Brexit impact on (North) Americans. It actually looks net positive overall!

Last Week in the Indexes… Due mainly to Friday’s plunge, all but one of the seven major indexes that we track were lower last week. The feisty Canadian S&P/TSX Small Cap Index managed to buck the trend with a 1.1% gain over the week. Without digging in, we’re relatively confident that smaller players in the gold mining section had some nice gains overall.

PTP… This may surprise you! Our ProfiTrend Portfolio APAR (annualized price appreciation rate) actually rose to 213% from 195% in the last report. The S&P/TSX Composite Index APAR eased back a point to 12%, but the S&P 500 APAR went negative to -10% from +10% a week earlier.
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We’re naturally pleased with our results! Our secret: avoiding diversification! We have lots of gold and silver stocks… pretty much the only beneficiary of Friday’s carnage.

PTA Perspective… Diversification is for the Ignorant!

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From previous discussions you know that we have mixed feelings about Warren Buffet and his holding company Berkshire Hathaway (BRK). Buffet is a lovable old codger with a traditional family-style sense of humour, and an “aw-shucks” humility that people love in a billionaire. But that’s just his public facade, and not an investment strategy. We’ve often talked about it being impossible for the average investor to “invest like Buffet”, unless that means just buying shares of BRK. That’s questionable too, as we’ve pointed out before. Anyway, we do know that he has an amazing collection of “one-liners” that do represent good investment practices. And, we can’t agree more with the one above! That is this week’s PTA Perspective topic. We explore the stupidity of blind diversification for diversification’s sake in detail, placing emphasis on the fact that diversification always reduces your profit potential as an investor.

Seasonality… Last week we discussed some seasonal trades that spanned July to include other months (pre- and post-July). This week we lay out the basic stats for July alone based on historical results. Spoiler alert… July is mediocre for stocks in general, especially Nasdaq stocks. Energy and Materials stocks are expected to do well, but it appears that these two sectors have already had a decent run, especially since oil bottomed-out and started rising quite some time ago.

Putting BREXIT in Perspective

SYNOPSIS

Last Week in the Indexes… All of the seven major North American market indexes that we track were down last week, from a little less than 0.0% to -1.9%. As has been the case for quite some time now, the losses were greater on the US side of the border.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) held steady at 195%, compared to 194% in the last report. The S&P/TSX Composite Index APAR declined to 13% from 28% previously, while the S&P 500 APAR dropped to 10% from 21% a week earlier.

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We’re naturally pleased with the performance of the PTP. You may recall that the four-year average for charts like the one above places the PTP APAR at about 100%, compared to 16% for S&P 500 and 9% for S&P/TSX Composite Index. We’re now tracking at nearly double our long term average. Our secret: avoid diversification!

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PTA Perspective… Putting BREXIT in Perspective

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The Brexit referendum on Thursday has been one of those intensely annoying world events that equity investors have to contend with. While the media try to remain balanced in terms of presenting the pros and cons, the fact that they are spending so much time on this story implies that it is important to investors everywhere. In reality the decision either way is probably totally inconsequential to the average North American investor. There may be a knee-jerk reaction to the results on Thursday in the equities markets, but that would only be the impact of the excessive media coverage that we’ve experienced. We explore this in more detail in this week’s edition.

Seasonality… This week we discuss some seasonal trades that span July to include other months. As you may recall we’re within the six-month span of unfavourable market conditions. Nonetheless, we’ve been making some excellent profits, since we were supposed to flee equities on May 1.

Another Look at Oil & Equities

SYNOPSIS

Last Week in the Indexes… During the previous week all of the major North American indexes that we track were up, except for a small loss in the DJIA. This past week was more mixed, with the Canadian small cap indexes, S&P/TSX Venture Index and S&P/TSX Small Cap Index, continuing to rise once again, while large cap indexes… S&P/TSX Composite Index, S&P 500 and Nasdaq Composite Index fell. The DJIA managed a tiny gain. All this left the S&P/TSX Venture Index still climbing at 1.7% per week and the S&P/TSX Small Cap Index climbing 1.1% per week.

PTP… Our ProfiTrend Portfolio APAR (annualized price appreciation rate) backed off a bit to 194%, compared to 217% in the last report. The S&P/TSX Composite Index APAR declined to 28% from 40% previously, while the S&P 500 APAR dropped to 21% from 27% a week earlier.

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The correlation between oil prices and general stock prices that has persisted for several months is breaking down and may well go away. It didn’t make sense in the first place, but we suspect that the media played a role in keeping the myth alive. In our discussion of this matter we stress the importance of always trying to identify misinformation, while at the same time translating misinformation into profitable trades. Our inherent desire to always make sense of everything can sometimes work against us. Spoiler alert: The long term average correlation between the price of oil and the price of stocks is zero!

Investor Confidence & Seasonality… We’ve left the State Street Investor Confidence Index results for May in this edition. It shows just modest declines in the allocation of “smart money” to equities during May. As for our calendar effects section, we’ll update that next week, as we prepare for what July might have in store. So far the “sell in May and go away” strategy would have been a mistake. In just over a month since April 30, the S&P 500 is up +1.6% and the S&P/TSX Composite Index +2.0%. Those may seem small, but they’re not bad for such a short time, given normal daily price swings. The historical average gains for May are +0.2% for the S&P 500 and +1.5% for the S&P/TSX Composite Index. For June the S&P 500 is normally flat at 0.0% and the S&P/TSX Composite Index drops -0.3% on average.