July Has Been a Top Month for Stocks Over the Past Decade. Will the Market Continue to Thrive?

Nine of the past 10 Julys have ended positively.

A big question is whether markets can continue to thrive this summer. Detrick expects a similarly good performance this year. He points out stocks will move higher if the U.S. economy continues to improve and corporate earnings remain strong.

However, there have been some signs of trouble heading into earnings season. Analysts have lowered earnings estimates for S&P 500 companies for the second quarter, as the bottom-up earnings-per-share estimate for the S&P 500 has fallen 2.3%, since March 31.

Other analysts have noted that equity valuations are looking stretched. Richard Farr, chief market strategist at Merion Capital, pointed to the S&P 500's price-to-earnings ratio, which has risen to 18.8 for the coming 12 months. This is above the five-year average of 18.6 and the 10-year average of 17.4. Farr is also concerned about what might happen to stocks if there were to be a reduction in the liquiditybeing provided by the Federal Reserve and the banking system.