Battered investors are looking for light at the end of the tunnel. Here is at least a small glimmer: The most bullish day of the year is here. According to Stock Traders Almanac, July 1 (or which day is the first trading day of July) is the most bullish day of the year.

Over the past 21 years, the S&P 500 has advanced 85.7% of the time on the first trading day of July. The average gain is 0.46%.

Those are pretty good odds, but it's only one day. Assuming July 1 is an up day, there is obviously a bigger issue: Is this actually light at the end of the tunnel or just another train (dead-cat bounce)?

Real light or just another train?

Remember, though that not every July 1 is created equal. No other July 1 occurred right after a Brexit vote. Here is how this particular July 1 (and even the Brexit stock market blow) fits into the bigger picture.

The bigger picture

The S&P 500 is currently digesting and retracing the rally from 1,810 (Feb. 11) to 2,120 (June 8). The June 8 Profit Radar Report recommended to short the S&P 500 at 2,110 as an insurance trade against lower prices. The downside potential was quantified via the June 19 update with the following chart and commentary:

"Based on Elliott Wave Theory, the S&P finished 5-waves up to complete wave 1 on June 8 at 2,120.55 (see chart below). Next should be a wave 2 decline. Waves 2 tend to retrace a Fibonacci 50%-61.8% of the prior move. The ideal target range for a wave 2 correction is 1,970-1,925."

On June 27, the S&P closed an open chart gap at 1,992.63. Chart gaps act as magnets, and with this magnet gone, downside pressure subsided. In fact, two very specific price patterns occurred that day, which suggest an upcoming bounce (outlined by the June 27 Profit Radar Report).

Nevertheless, the S&P 500 has not yet reached the ideal down side target, and the bullish July 1 is unlikely to bring any lasting relief, at least not yet.

The S&P 500 just suffered a panic selloff like in August 2015 and January 2016. Although the media puts a different label/reason on each panic decline, history suggests that post-panic selloffs follow a somewhat predictable pattern.

A detailed description of this pattern and what it suggests is next is discussed here: S&P 500 Forecast.