Monday, May 1, 2017

Sell in May and Go Away Not What You Think In 2017

Those that blindly sell in May because of the seasonal tendency of stocks prices to decline or trade sideways from May to October could disappoint investors in 2017. Seasonal tendencies are influenced by broader cycles and concentration. Large and small cap performance over the summer months varies according to its placement in the 4-year cycle. This is an offshoot of the economic cycle that many teach cannot exist within the random walk theory. While simple correlations suggests that the random walk is wrong, it's still taught and embraced as fact that borders on religion..

I encourage you to review the sell in March (not May) and go away til October tendency.  Notice how this tendency varies in intensify when TIME shifts from 5-years to nearly 100-years.  Also, notice the subtle shifts when studied within the the 4-year cycle; certain months are stronger, while others significantly weaker.  This is important because June is fast approaching.

Headline: Trader Talk: Why "sell in May and go away" is not quite so simple

It's that time again: May. Springtime, and time to revisit that old adage — sell in May and go away.

I've written many times about this, probably the most famous of Wall Street saws, so I'll keep this short.

You can argue about exactly why this seems to work, but over long periods there does appear to be something to it. Since 1950, the S&P 500 has had an average return of only 0.4 percent during the May-to-October period, compared with an average gain of 7.4 percent during the November-to-April period. This is according to Yale and Jeff Hirsch, who first brought this connection to light in 1986.



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