4 Reasons the S&P 500 Could Drop 20% This Summer

NEW YORK (TheStreet) -- The S&P 500 of 2015 is looking a lot like the S&P in 2011.

In 2011, the S&P, tracked by the SPDR S&P 500 ETF (SPY), was volatile but flat going into June. The real fireworks started thereafter, when stocks dropped 20% in July and August. Could the same happen in 2015?

Here are four reasons why a 2011-like summer drop is possible:

1. 2015, like 2011 is a pre-election year. Years with the same position in the election year cycle tend to have similar features.

2. Both in 2011 and 2015, the S&P was stuck in a trading range for the first five-and-a-half months of the year. Both times the S&P was flat after 111 trading days (June 12).

3. The S&P 500 appears to be spinning wheels, or coiling. In 2015, the S&P 500 moved a total of 2,231 points (sum of swings from daily high to low) in the first 111 trading days (June 12) of the year.

What does the S&P have to show for it? A meager 1.71% gain. The last time there's been so much real volatility with little net gain was in 2009.

In essence, the S&P moved 1,305 points for one percent of gain. This ratio was only exceeded in 2011, when it took 1,309 points for one percent of gain (S&P was up 1.13% after 111 trading days).

Sometimes the market, like a snake, coils up before it strikes. Could that happen in 2015? 

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