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  • The S&P 500 has staged a 93% rally to new records since its pandemic low reached in March 2020.
  • That strong surge in such a short period of time means the market is “ripe for a pullback,” LPL said in a Wednesday note.
  • A decline could occur in seasonally weak June, but any weakness should be bought, LPL argued.
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The stock market is “ripe for a pullback” following its monster rally from the pandemic lows, according to a Wednesday note from LPL.

The S&P 500 has rallied 93% from its intra-day low reached in March of 2020, and now the market needs to consolidate those gains. Add in that June has historically been a weak month for stocks, and a period of weakness for stocks seems likely, according to the note.

Since 1950, June is the fourth worst month of the year, according to LPL. Only September, February, and August have produced worse returns. And when June is a down month, stock on average fall 2.9%. But it isn’t common for a major market sell-off to begin in June, as stocks have rarely fell more than 5% during the summer month.

“We wouldn’t be surprised at all if stocks took a well-deserved break in June, but this month is rather misunderstood, as a massive sell-off or the start of significant weakness isn’t likely, as that isn’t what June typically brings,” LPL’s chief market strategist Ryan Detrick said.

Therefore, Detrick suggests investors take advantage of any market weakness and buy the dip. Given the ongoing recovery in the economy, combined with historical fiscal and monetary stimulus, “we expects any weakness to be short-lived,” said Detrick.

And with last Wednesday marking the 100th trading day of the year, strong performance could be in store for the stock market in the second half of the year.

“When stocks are up more than 10% on day 100, the rest of the year has been higher 84% of the time and up 8.6% on average,” Detrick said, adding, “this is yet another clue that this bull market is likely alive and well, and we’d recommend adding to equity exposure on any weakness.”

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