How does the ASX 200 typically perform in June?

2023 has followed ASX 200 seasonality trends to a tee – The market went full circle between January and March, rallied strongly in April and started to taper off later that month.

May, June and September have historically been the worst performing months of the year for the ASX 200, according to data between June 1992 and March 2023.

The ASX 200 lived up to 'Sell in May' expectations, down 2.98%.

While June kicked off with whipsaw price action, rallying 1.8% in the first three days followed by a two day selloff, down 1.4%.

What does the A-typical year look like?

The seasonality chart below is constructed from daily S&P/ASX 200 performance between June 1992 and March 2023.

Today's date (Thursday, 18 April) represents day 108.

ASX 200 seasonal performance (June 1992 to March 2023)

ASX 200 monthly seasonal performance (June 1992 to March 2023)

2023 has been more-or-less in-line with seasonality trends.

It's worth noting that Santa rally failed to eventuate last year, with the ASX 200 down 3.4% in December. This sharp decline might have exacerbated the bounce the market experienced in January, where it rallied 6.2%.

ASX 200 year-to-date chart (Source: TradingView)

What does the data tell us?

Season trends are evident in many asset classes, based on recurring catalysts, typically supply and demand patterns or simply the self-reinforcement of such patterns. We see similar seasonality trends in the US as well.

S&P 500 and VIX seasonality (Source: Topdown Charts)

ASX 200 seasonality trends tell us to brace for more downside volatility, especially as we head towards the end of the financial year aka tax loss selling.

The question is, as the market becomes more and more oversold, does that set it up for a bounce or relief rally in July?