Sell in May, Go Away a Bad Play This Year
$DIA, $SPY, $QQQ, $VXX
The data shows that the S&P 500 has delivered a total return, including reinvested dividends, of 10.8% over the last 6 months, essentially capturing all of the average rolling 12-month total return on the index since Y 1990.
The Big Q: Why not cash in?
The Big A: Some American fund investors have withdrawn more than $17-B from US stocks this May, with some $10.1-B in withdrawals last week alone, the 2nd biggest outflow this year so far.
But running against that tide, hearty investors are betting against that and have advocated the Buy-in-May approach this year, and sell in November.
Stocks may have priced in hope for a Trump policy stimulus this year, and are looking to a growing economy in the US and globally to boost Bullishness.
The Sell-in-May strategy is premised on the historic outperformance of the November-May period over the other 6 months of the year.
In the last 20 years, a $100 investment in the S&P from November through April would have become $343 while a $100 investment in May through October in the same years would have slipped to $98.5, according to the historical data.
From Y’s 1928 to 2017 the $100 would have become $4,270 from November through April but would only be worth $257 from investing from May through October.
In the Summer months things slow down so participants tend to see the chances for a pickup in volatility. That’s usually accompanied by weakness in the market. That has not happened this year.
Notably, the small cap Russell 2000 index has risen just 1.8% YTD, compared with 7.8% for the S&P 500, 6.6% for the DJIA, and 15.3% for the NAS Comp.
To get to a sell mode we would need a Fed that’s more Hawkish than expected mixed with economic data that’s weaker than expected. That combination could give us a domestic stock sell off this Summer. Last week markets discounted that scenario after the Fed mins were published, expecting the FOMC will stay Dovish this Summer.
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Bullish (0.39)||Neutral (0.23)||Bullish (0.42)||Very Bullish (0.51)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Bullish (0.35)||Bullish (0.44)||Bullish (0.29)||Bullish (0.33)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Bullish (0.46)||Bullish (0.48)||Bullish (0.31)||Very Bullish (0.58)|
|HeffX-LTN Analysis for GLD:||Overall||Short||Intermediate||Long|
|Bullish (0.25)||Bullish (0.25)||Bullish (0.29)||Neutral (0.22)|
|HeffX-LTN Analysis for VXXL||Overall||Short||Intermediate||Long|
|Bearish (-0.41)||Bearish (-0.44)||Bearish (-0.42)||Bearish (-0.38)|
Have a terrific week.
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